Get ‘Er Done: NCUA Ups the 5300 Ante
Here I was, embarrassed last week to admit that I bounced a check last year, and come to find out one in seven of you don’t turn your 5300 Call Reports in on time.
And last quarter wasn’t just a case of CFPB mortgage reg prep or time-consuming budgeting season, either. The letter to federally insured credit unions from NCUA Chairman Debbie Matz said a large percentage of late filers last quarter were chronically late, repeatedly filing after deadline.
To someone in the news business, where we live and die by deadlines, that sounds pretty staggering to me.
And the fines the NCUA could assess are also staggering: up to $2,000 per day if a 5300 report is late, or if any information in the report is accidentally inaccurate AND the credit union already has procedures in place to prevent inaccurate information. If no procedures are in place, or if the report is more than just a few days late, that fine could increase to $20,000 per day.
In a nod to the NCUA’s increased focus on mitigating internal fraud (for which they deserve a tip of the hat), credit unions that file false or misleading reports knowingly, or with reckless disregard for accuracy, could be fined up to $1 million per day or 1% of total assets.
Look, I know there are a million tasks to accomplish in a credit union every day. It’s hard to prioritize.
I recall one planning session back in my credit union days when our meeting facilitator had the management team make a master list of all projects we had planned for the upcoming year. The resulting list was pretty long, as they probably are at most credit unions.
“Okay, now let’s prioritize the list,” the facilitator said. She then asked our CEO to tell her which projects on the list she felt were crucial and absolutely had to be done in the next year.
“All of them,” my CEO replied.
“I don’t think you understand what we’re trying to do here,” the facilitator replied. “We’re prioritizing your tasks so you can focus on them in order of importance, which increases the likelihood that they get accomplished.”
“They’re all important,” my CEO said, standing her ground. “We must accomplish them all.”
“That’s not prioritizing,” the facilitator said. “You can’t just add more hours to the day.”
“We can’t fail, either,” my CEO said. “We do whatever we need to do to fit it all in.”
That conversation has stuck with me throughout my career. I was a middle manager at the time and frustrated by the long list of items that required my participation … and I was merely in charge of business development, not operations or anything truly crucial.
Folks, that was back in the year 2000. Before September 11, before the mortgage meltdown, before the corporate implosion and before the CFPB. Wasn’t life easy back then? It almost seems quaint, doesn’t it?
And yet, even back then, the daily grind at your average credit union was incomprehensible to our meeting facilitator.
The point is, I get it. Even if your core system spits out everything you need for your 5300 reports, those numbers still have to be verified, cross checked, analyzed and certified.
But to me, 5300 reports are like taxes. When the feds require you to send in your forms by a certain date, you do whatever you need to do to fit it in.
Not long after we posted our story about the fines, a reader expressed frustration over the announcement, calling the NCUA a typical government agency in a comment left on our website.
“Did anyone think for a minute that maybe credit unions just have too much work? What is a small staff supposed to do?” the reader wrote.
The reader said his or her credit union always has its call report finished in the first few days of the new month, but in protest of the civil penalties, would in the future transmit 5300 numbers no sooner than the deadline date.
As much as I love sticking it to The Man, this doesn’t seem like the best reaction. I’m guessing the NCUA is getting pressure from other places, maybe the U.S. Treasury, about how quickly it can produce quarterly industry data.
If there are specific reasons why some credit unions simply can’t make the 5300 deadline – overburdened accounting or audit vendors, complex investment products, core processing shortfalls, etc. – I’d love to hear about them. Please email me your thoughts.