Financial Services Committee Should Have Been Consulted on Data Collection, McHenry Says

WASHINGTON-Congressman Patrick McHenry (R-N.C.) and NCUA have begun round two. The freshman House Financial Services Committee member and NCUA Chairman JoAnn Johnson have traded correspondence over whether and how to proceed with an effort to collect data on member service, as requested by House Ways & Means Committee Chairman Bill Thomas (R-Calif.). McHenry previously, at the strong urging of America’s Community Bankers, introduced legislation to curb NCUA’s authority over credit union-to-mutual savings bank conversions. “This two-day random Community Reinvestment Act exam not only places undue burdens on federal credit unions, but also appears to completely disregard the authority of the Congress and the Office of Management and Budget,” a Feb. 28 letter from McHenry to NCUA Chairman JoAnn Johnson read. After the data collection effort was brought to OMB’s attention, NCUA was given an Aug. 31 deadline to complete its survey. When asked whether he was happy with the consultation with OMB and the resulting approval with a deadline, McHenry told Credit Union Times, “I think I’d be more pleased to begin with if NCUA had consulted the Financial Services Committee, the committee of original jurisdiction, before sending out this mandate.” His letter went on to state, “More importantly, you personally testified last year before the Financial Services Committee regarding the need to reduce the oppressive regulatory burden facing credit unions. It seems hypocritical to ask Congress to reduce burdens while at the same time adding additional regulatory burdens to federal credit unions. As a Member of both the Financial Services and Budget Committees, I am concerned with the possible consequences to individual institutions and the members. “I urge you and the NCUA Board to reconsider this proposal.” In response, Chairman Johnson wrote on March 7, “It is critical that the information collected fairly represent all credit unions, since each credit union has a distinct field of membership. As a result, we have been working to collect data that would be accurate, and to avoid any new and burdensome reporting requirement on credit unions. To this end, the data collection pilot was designed so that NCUA examiners, rather than credit union staff, are primarily responsible for collecting the information. I assure you NCUA’s commitment to limiting regulatory burden on credit unions has never been greater.” Johnson continued, “NCUA has developed an information gathering process which is statistically sound for all Federal credit unions. This process has minimal impact on the small number of credit unions that will be reviewed. Additionally, it is expected that this initially minimal impact will further decline as the project progresses.” She added that NCUA has subsequently received approval by the Office of Management and Budget for the data collection initiative, which imposed an Aug. 31 deadline, and had already briefed the senior staff of the House Financial Services Committee. “I do want to make one point explicit: this information collection is in no way an attempt to impose Community Reinvestment Act (CRA)-type requirements on credit unions,” Johnson wrote. “As a member of the NCUA Board, and as its Chairman, I have consistently viewed CRA for credit unions as an inappropriate and unworkable requirement that would impede, rather than improve, credit union efforts to reach out to those Americans who are economically disadvantaged. Also, Vice Chairman Hood and Board Member Hyland have publicly expressed their approval of this position. Any suggestion to the contrary would be a misreading of the public record that we as a Board have complied, as well as the personal philosophy that I have brought to my service on the NCUA Board.” NCUA Director of Public and Congressional Affairs John McKechnie stated, “We continue to welcome any and all input from Congress.” In a subsequent interview, McHenry said he did not necessarily object to NCUA’s data collection effort, but the agency should have consulted with the House Financial Services Committee to ensure credit unions were not going to be overly burdened. The congressman acknowledged Ways & Means Committee Chairman Bill Thomas’ (R-Calif.) authority to look into the issue from the tax-exemption angle, but the agency should have looked to the Financial Services Committee as to how to proceed before “unilaterally” placing this burden on credit unions. McHenry added that as someone who supports the credit union tax-exemption, he did not want to see it taken away. “I’m always mindful of ensuring credit union members are protected.It’s about protecting credit unions. It’s about undue burden from a regulator. I want to ensure NCUA is acting appropriately and reasonably,” he said. -