In a final letter to NCUA Board members before their critical vote on credit union prompt corrective action (PCA) February 2, CUNA Examination and Supervision Subcommittee Chairman Gary Wolter reiterated CUNA's recommendations on the impending safety and soundness tripwire regime, including the possible use of secondary capital in "complex" CUs' risk-based net worth calculations and as a way to shield CUs from agency discretionary powers under PCA.
In the letter Wolter also asked the agency to keep the designation of "complex" limited so as to minimize the number of CUs that have to set aside additional "risk-based net worth"-and he made a bid for the disallowance of NCUA discretionary powers on CUs that are only marginally undercapitalized.
In a digression from the PCA-only theme, however, Wolter also brought up the gathering controversy over NCUA's steadily growing budget, and asked board members to provide information directly to credit unions about the agency "budget process and resource allocation."
According to Wolter, that information should include:
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why the budget has increased over the last several years;
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whether individuals were hired exclusively for Y2K and if they were, why is it necessary to retain them;
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agency justification for the current overhead transfer rate (percentage of the agency's operating fund paid by credit unions);
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steps the board is taking to reduce or eliminate further budget increases.
Federal Regulators are readying their privacy policies in order to be in compliance with the Gramm-Leach-Bliley Act, the financial modernization bill, and the Federal Reserve is likely to be the first to put its own out for public comment.
Bank and thrift regulators were required by the law, enacted last Fall, to adopt privacy rules by May 12 so they would become effective on November 12.
The Fed will have voted on its privacy policy on February 3. It has been dubbed "Regulation P."
The Office of the Comptroller of the Currency (OCC) will issue its own set of rules later in the week, as will the Federal Deposit Insurance Corp. Only the Office of Thrift Supervision and the National Credit Union Administration will remain after that.
During the legislative discussion of the Act, credit union trade association lobbyists fought hard for (and won) a provision which enabled the NCUA to retain separate rulemaking authority. That carving out of, or the separation of powers was an acknowledgement that credit unions have very different approaches to protecting the financial information gathered on members.
Able to avoid the hotly contested argument stirred-up by the sharing of such information between affiliates in the banking sector, credit unions secured the ability to share vital data with third-party vendors they contract with, as long as such information is not resold or redistributed. Credit unions typically have vendors sign confidentiality agreements to that end.
The NCUA reportedly was using the boilerplate banking policy to shape its own, but the agency has not said when its own policy will be made available to the press.
In a comment letter filed with NCUA January 27 on the agency's interim final Truth in Savings rule, NASCUS said it was pleased that provision was being made for credit unions to electronically deliver periodic statement disclosures to members if the member agreed to this form of delivery. The state CU trade association urged the federal regulator, however, to alter its final rule to reflect:
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provision for what constitutes a valid agreement between member and the CU on the issue;
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the electronic means by which the CU may transmit disclosure notices to members, including their posting on the institution's "electronic credit union" site; and
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NCUA reference to the current executive order pertaining to the issue, E.O. 13132, instead of to the out-dated E.O. 12612. -
gmcorrigan@mindspring.com
