For NCUA, Transparency Should Be the Hallmark
This week, the NCUA and other financial regulators will testify before the House Financial Services Committee and discuss the impact of red tape on the country’s consumers.
While having the NCUA discuss credit union issues before Congress is certainly welcome, NAFCU is just as concerned with what may not be discussed.
Transparency should not only be reserved for the positive. And there have been a lot of positives lately. The most recent announcement from NCUA that credit unions may not have to pay any future corporate assessments was certainly good news. The more than $1.75 billion in total recoveries from securities lawsuits is unbelievably positive. The share insurance fund continues to improve as the number of CAMEL 4 and 5 credit unions decreases.
But with all the fantastic news coming out of the NCUA, NAFCU still believes the agency needs to do more. The NCUA is a steward of credit union dollars, and credit unions need to know how all of the dollars they send the NCUA are applied. Yet each new piece of good news from the agency sometimes leaves us with more questions.
A case in point is the cost of lawsuits related to corporate credit union losses. The 2013 audit report for the Temporary Corporate Credit Union Stabilization Fund reports an aggregate $390 million in professional fees, but it is unclear specifically what this amount covers. Unfortunately, this gives credit unions no insight into any specific costs of litigation and whatever other costs may be reflected in this total.
Similarly, the details on management of legacy assets by the Asset Management and Assistance Center are also under-reported. Currently, only lump-sum figures tell the story of the legacy assets and the underlying NCUA Guaranteed Notes program. These figures are based on the agency’s current assumptions about the future performance of the assets.
The NCUA, however, has not disclosed any details about these assumptions, and it has provided no insight as to how the agency reached these assumptions. While current assumptions point to no expected assessments in the near future for the stabilization fund, it would be helpful for credit unions to know which factors and circumstances figure in those assumptions.
This insight would allow credit unions to incorporate appropriate safeguards to protect themselves should the assets and litigation recoveries not perform in the manner NCUA expected.
Additionally, we need more details about the NCUA’s budgets.
NAFCU believes these are very important questions that deserve answers, not because we believe there is necessarily anything to hide, but because every NCUA dollar is a credit union dollar. This is why we have submitted several Freedom of Information Act requests to learn the details of the expenses that are coming out of the Central Liquidity Facility, the National Credit Union Share Insurance Fund, the NCUA operating budget and the TCCUSF.
Because these funds are fully supported by credit union assets, credit unions are entitled to know how each is being managed.
NAFCU believes transparency should be part and parcel of NCUA’s daily operation. We hope that we continue to see the positives, but we want that whole picture to come to light. This could be a hallmark that the NCUA can be proud of.
Dan Berger is president/CEO of NAFCU. He can be reached at firstname.lastname@example.org or (703) 522-4770.