Derivatives Rule Steps On Agency’s Funding: Letter to the Editor
Regarding the Editor’s Column in the May 29 issue, “Usage Fees Are Not a Strange Idea.” Sarah Snell Cooke’s support of the pay for play precedent in the NCUA’s recently proposed rule on derivatives misses the point. We strongly support and have continually advocated expanding credit unions’ investment powers to include limited derivatives authority. Such expanded powers are crucial to the present and future safety and soundness of our industry as it continues to evolve. We also believe it is imperative, as Board Member Fryzel has publicly stated, that the agency move forward with derivatives authority, as opposed to leaving it as a perpetual pilot program.
Our issue is simple–the agency’s proposal co-mingles the proposed derivatives rule with the funding of the agency. The funding of the agency is, in and of itself, a significant strategic issue that must be considered on its merits, separate and apart from any program. As we have long noted, every dollar begins across the teller window at a credit union. Over the past eight years, the NCUA has proceeded to significantly increase its budget, notwithstanding the fact that the number of credit unions has steadily decreased at a rate of almost one a day. Furthermore, the agency no longer gives its stakeholders the opportunity to comment on its budget.
Historically, the agency has been funded by two mechanisms: an annual assessment on federal credit unions and the overhead transfer rate. Given this proposal, one can only surmise that the agency is now looking to other funding mechanisms for which the agency should be completely and fully transparent.
Fred R. Becker Jr.
President and CEO