In a lively and long meeting, the NCUA Board Thursday passed next year's budget, told CUSOs they will have to start reporting some basic profile information and declared there will be no corporate assessment in 2014.
In an interview with Credit Union Journal following the meeting, board chairwoman Debbie Matz said she thought that CUs will be very relieved to hear they won't have to pay an assessment next year.
She attributed the good news to an improving economy and
"There are smiles on our faces after that huge settlement," Matz said. "Good things happen to those who wait."
The agency's 2014 budget will rise to $268 million, a 6.7% increase over last year, and the largest operating figure ever. The NCUA said the budget was formulated using zero-based budgeting techniques to "ensure each activity is individually justified to receive funding."
Nevertheless, there was some criticism from industry trade groups over the hike.
National Association of Federal Credit Unions president and CEO Dan Berger noted that the NCUA's budget will be funded, in part, by $79 million in operating fees.
"NCUA reduced its 2013 budget during the regular midyear programming, and we appreciate that," says Berger. "Still, we believe the agency can and should do more to lower its operating expenses, especially since it is regulating nearly 1,000 fewer credit unions since the financial crisis."
On the credit union service organization front, all CUSOs must start getting ready to report basic profile information to the NCUA on June 30, 2014. This reporting requirement will be rolled out as the NCUA builds a national registry to house the information, which won't be released until late 2015.
CUSOs that engage in three high-risk business categories—credit and lending, information technology and custody, safekeeping and investment management—will also be required to report additional information, including audited financial statements and customer information, according to the rule approved by the board Thursday.
"CUSOs are an essential part of the credit union system, but they also represent a significant potential risk that is not transparent," Matz says. "It is very important that NCUA have the information needed to assess that risk. Since proposing this rule two years ago, we have continued an open dialogue with stakeholders. We listened carefully and made substantial changes to reduce reporting burdens and target the final rule at CUSOs posing the most risk."
Since 2008, nine CUSOs have caused more than $300 million in direct losses to the Share Insurance Fund and led to the failures of credit unions with combined assets of more than $2 billion.
