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ALEXANDRIA, Va.-While the seventh floor of NCUA’s Alexandria, Va. headquarters is fairly quiet right now with two empty board offices, NCUA Chairman JoAnn Johnson has declared a `new day’ at NCUA, a theme that she has conveyed to agency senior staff. The two-member NCUA Board over the last 18 months has kept some issues at bay, Johnson said, but no longer. With the full complement of board members expected by the Nov. 29 board meeting, items Johnson wished to address that were held up by former NCUA Board Member Debbie Matz’ de facto veto power, will get their chance before the board. The November meeting is expected to be a busy one with the agency’s budget and setting of the overhead transfer rate, as well as four community charter conversions, at the very least. When NCUA Executive Director Len Skiles presented the agency’s proposed 2006 budget in October at the budget briefing, three full-time equivalents had been eliminated. “I continue to look for areas where, if resources aren’t being used, if there’s more that can be used better in another area, I continue to look for that. These were slots that were not being used and we had more immediate needs for these slots,” Johnson stated. “We’ve done a much better job on filling our vacancies and we continue to work on that.” Staffing was one area that Matz and Johnson could not find agreement on. “Ms. Matz and I worked well together,” the chairman explained. “There were from time to time issues that may have been delayed or just couldn’t be addressed at the time.” Johnson wanted to cut two open full-time equivalent slots last year from the 2005 budget, but her Democratic colleague would not permit it. Looking ahead, Johnson said, “It’s a new day at NCUA and I think this is an opportunity to move forward in a positive manner with two bright, very intelligent board members coming on…Having a board at full capacity-you know, it’s been a year and a half since that’s been the case-that’s very exciting.” Johnson continued, “I think in particular Rodney Hood’s background in the community development and in the housing area, that will be a nice asset for him to bring. His experience will be very valuable. “And, of course, Gigi has experience in the corporate (credit union) area but in the credit union community as well. She thoroughly understands credit unions. Both of them are very enthusiastic. I look for a new energy here,” Johnson commented. She added that she thinks their three philosophies will align, having known both of them from previous work with the agency. Hood spoke at an Access Across America workshop on the agencies’ rural housing agreement and Hyland worked with the agency on the corporate regulation overhaul. Johnson said that going forward, she would like to make clear that Access Across America is an agency initiative and continue its outreach work to highlight federal partnerships the agency has established. “I am looking to perhaps make more of an agency initiative that will give each board member the opportunity to do outreach for the agency but do it more under an umbrella of the agency,” she explained. “I think it utilizes our staff to a better degree and also [for] scheduling.” The program’s focus is currently on increasing credit union participation in Health Savings Accounts in partnership with the Treasury Department. NCUA is also trying to increase credit union work in the Volunteer Income Tax Assistance program with the IRS. And, of course the former teacher stressed the importance of financial education. “That’s probably the foundation for every other program,” she said. Credit union capital has been a hot button issue whether at the regulatory or legislative level. NCUA is working steadily to try to get risk-based capital provisions in the Financial Services Regulatory Relief Act (H.R. 3505) already included in the Credit Union Regulatory Improvements Act (H.R. 2317). “We continue to support that very strongly,” she said. “Hopefully, it will get in one of these pieces of legislation.” “For some reason, there seems to be that agreement on one side that there will be no more changes, and even after that there were some banking provisions that were added,” Johnson noted. “But, there are several members of Congress that are very supportive and I think will continue to try to make this a part (of the legislation) in the markup or at some point, hopefully, they will be able to put it in.” She continued, “I’ve talked even with other regulators and they agree that it’s a regulatory tool for us and so I would hope that the rest of the committee will recognize it for that: a tool that helps us recognize problems earlier.” Johnson also noted that the bankers are already trying to revise their capital system while credit unions are just now trying to move to a risk-based framework. Capital initiatives that came out of NCUA’s Capital Summit a year ago were lowering credit unions’ net worth benchmark for RegFlex eligibility and allowing low-income credit unions to release secondary capital deposits after they have outlived their usefulness for PCA have been issued by the agency in the form of proposed regulation. The other idea raised at the summit was creating a risk-based capital system for corporate credit unions, which would not require statutory change. Chairman Johnson said she does have agency staff working on the matter. She said she does not have a timeline on when the agency will release that proposal. NCUA staff are also reviewing the examination matrix and “whether that needs to be tweaked or totally eliminated.” One of the key issues that Johnson pointed out in talking to people throughout the credit union community is expanding their investment opportunities. “I’ve directed staff to take a look at derivatives and perhaps some additional pilot programs and look at it with a focus on how to mitigate risk instead of just saying `this is a problem, we don’t want to go there.’ If it’s a problem, let’s see if there is a way it can be done,” she said. She touted pilot programs and said she would be looking into more to expand credit union investments. So while some items have been stymied over the last 18 months with a two-member board of opposite political parties, Johnson is optimistic about the remaining two years on her term. “I have a good two years left on my term. I have a lot of time going forward,” she said. However, the chairman added, “I’d wish the appointment/confirmation process were perhaps structured a little differently because that is an unusually long time to leave a position open. Could some things have been accomplished in that time? Probably, yes. But I’m optimistic that going forward we’ll be able to pick up and get quite a few things done.” [email protected]

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