Matz Opposes Budget Hearing Bill
NCUA Board Chairman Debbie Matz is against the bill Senate banking members introduced on Tuesday that would require the NCUA to hold budget hearings.
“Chairman Matz strongly opposes the bill, as it would undermine the independence of the agency and lead to regulatory capture,” NCUA Public Affairs Specialist John Fairbanks said. “No other financial institution regulator is subject to an annual budget hearing requirement or conducts such a hearing.”
NCUA Board Member Mark McWatters called for budget hearings at a board meeting in November of last year, where he voted against the NCUA’s $279.4 million operating budget for 2015. He also said the operating budget should be made available in advance of the full board vote.
“What exactly is this idea of regulatory capture?” McWatters asked in 2014. “It seems to be that if you can have a public meeting where everything is on the record, everyone can see it, total complete transparency, how in the world can that be something approaching regulatory capture when someone meeting in your office having the same comments and the same concerns is not regulatory capture?”
Sens. Dean Heller (R-Nev.) and Mark Warner (D-Va.) introduced the bill, which would amend the Federal Credit Union Act and require the agency to “hold a public hearing, with public notice provided of such hearing, wherein the public can submit comments on the draft of such detailed business-type budget.”
In February, Sen. Richard Shelby (R-Ala.), chairman of the Senate Banking Committee, asked Larry Fazio, NCUA director of examination and insurance, why the NCUA is not permitting stakeholders to comment on the agency’s budget during a public hearing.
“Board Member J. Mark McWatters dissented from the adoption of NCUA’s 2015 budget and stated that the NCUA Board should permit public input on NCUA’s budget. Since NCUA’s budget is funded by mandatory contributions from the credit union community, why not permit members of the credit union community to comment on NCUA’s budget at a public hearing?” Shelby asked Fazio in a follow-up letter to a Senate Banking Committee regulatory relief hearing on Feb. 10.
Fazio officially responded to Shelby on Friday, saying the NCUA’s approach is consistent with all federal financial institution regulators.
“NCUA Board Chairman Matz believes it is important to avoid even the appearance of regulatory capture in the budget process, whereby regulated industry entities attempt to dictate or improperly influence the final budget of the independent regulator responsible for supervising those entities,” Fazio, who testified at the Feb. 10 hearing, wrote.
Fazio said cutting agency resources and costs were the consistent messages delivered by regulated entities in public budget hearings held prior to 2009.
“When the Great Recession hit, NCUA was insufficiently resourced to address the ballooning number of troubled credit unions because the NCUA budget and staffing levels had not kept appropriate pace with industry growth over time,” he said, referencing a graph showing credit union and NCUA assets. “NCUA is a relatively small federal agency, and most costs are relatively fixed; over 83% of our budget funds personnel costs and travel.”
Fazio said several levels of management review the exam hours recommended by staff before budget requirements are provided to the board for consideration.
“The board then makes additional adjustments as necessary, to meet the over-arching goals of NCUA’s three-year strategic plan,” he said.