ARLINGTON, Va. – NASCUS has circled the month of October on its calendar. That's when the NCUA Board is scheduled to take up the overhead transfer rate. With six months to go, NASCUS has been taking a new tack to bring about change to how the rate is derived and administered. "It's interesting the way the [overhead transfer rate] issue has evolved," says NASCUS President/CEO Doug Duerr. "Our focus used to be on the actual rate, but we realized it was a case of putting the cart before the horse. The NASCUS leadership has begun to look at designing the cart differently." Duerr said NASCUS' objective is for NCUA to "create a system that more effectively uses its resources. If we can do that, then the OTR will take care of itself." The NASCUS Board and NCUA Board have had an on-going dialogue exploring the OTR in quarterly face-to-face and telephone meetings. The discussions are an outgrowth of an agreement NASCUS and NCUA reached two years ago following the association's release of its overhead transfer study, for the agency to work with state regulators to look in to ways to revise the examination format used by state regulators to assure that they and the NCUSIF receive sufficient information in examination reports. So far, said Duerr, most of the talks between the two boards have been about conceptual changes. "There have been no changes put out on the table yet," he said, adding that the NCUA Board and in particular NCUA Vice Chair and NASCUS Liason JoAnn Johnson, "have been very receptive to our comments." When asked if any organization changes by NCUA would require an act of Contress, Duerr said,"There are ways to bring about changes that are administrative that the NCUA Board could make without requiring an act of Congress. There could also conceivably be some proposals that require legislative change." Duerr insisted that the overhead transfer rate and private insurance are not mutually exclusive. "The overhead transfer rate is an issue, but even more so is the way everything has gotten blurred in the internal organization of NCUA," says NASCUS Duerr. NCUA's dual role as the federal regulator and administrator of the NCUSIF, an authority given the agency by Title II of the FCU Act,"makes the OTR suspect," said Duerr. Duerr denied allegations made by some credit unionists that the association is hiding behind the overhead transfer rate to make the private share insurance option an issue. "The overhead transfer rate is part of the issue. State-chartered credit unions should want to be certain there is a share insurance alternative that serves as a nagging concern for NCUA to be cost effective with the overhead transfer rate," says Duerr. He offered that, "Title 2 of the Federal Credit Union Act stipulated that NCUA should be the administrator of the NCUSIF for cost advantage reasons. Unfortunately it's no longer cost effective," he says. NASCUS recently published two Quick Guides to offer background information on the National Credit Union Share Insurance Fund. "What Really Stands Behind Credit Union Share Insurance," written by Bert Ely, a principal in the financial institutions consulting firm Ely & Company, Inc. for the NASCUS Foundation for the Preservation of Dual Chartering explains that "credit union share insurance exists for just one reason – to protect the principal balance and accrued interest on a members' shares, up to the pre-determined insurance limit.share insurance is activated only when a credit union has been declared insolvent.only if a credit union becomes insolvent does share insurance come into play." It reads. The second guide, "Insuring Choice" by Chip Filson is based on a letter the Callahan & Associates president wrote to Colorado Financial Services Commissioner Dave Paul concerning the state regulator's decision not to allow the state's credit unions the option to be privately insured (CU Times, April 16). Duerr said both guides are intended to be used as informational pieces on the NCUSIF and private insurance issues. Bruce Jolly, an attorney with the Washington, D.C. firm Shook Hardy & Bacon LLP, is also working on a Quick Guide on the Unrelated Business Income Tax (UBIT). -

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