NCUA Executive Director Len Skiles said the additional personnel are needed for closer oversight. He noted, for example, that CAMEL ratings have a "shorter shelf life" when conditions change quickly. He also noted that because of regulatory changes and mergers creating larger credit unions, the average amount of time examiners spend on each examination will increase from 88 to 94 hours next year.

The additional funds, which would be paid for by a 10% increase in the fees that federal credit unions pay the agency, would be used to hire additional personnel, centralize the chartering process and place federal credit unions on a 12-month examination schedule. Currently, the agency examines credit unions on an 18-month cycle.

Additionally, the overhead transfer rate, which is the amount of NCUA's budget paid for by transferring funds from the NCUSIF for insurance-related business, will increase from 52% in 2008 to 55% next year.

The agency also proposes centralizing the chartering process.

Officials of CUNA, NAFCU and NASCUS expressed concern about the proposal, saying it would place additional costs on credit unions and state regulators at a time when those organizations are already strained.

CUNA Senior Vice President/Deputy General Counsel Mary Mitchell Dunn said that while no one wants to look back and say some of the problems with individual credit unions could have been avoided with more examiners, there is a need to be careful and not add compliance costs to credit unions.

"Credit unions are reading in the paper about what positive things government is doing for the banking system. Credit unions are not seeing the same positive developments, and the specter of additional operating costs and possibility of higher premiums is not appealing," she said.

NAFCU President/CEO Fred Becker said the agency should only increase its examinations of credit unions that have had difficulty in recent months.

"They can monitor credit unions electronically and through the call reports rather than changing the cycle," he said. "Also, once you hire new personnel it is hard to get rid of them if there is no longer a need. That's why they should consider using independent contractors more, rather than making the permanent commitment."

NASCUS President/CEO Mary Martha Fortney urged regulators to be careful when changing their examination schedules and standards "because of the limited options some states may have to substantially alter budgetary and examination program restraints."

Former NCUA Board Member Debbie Matz, who said she pushed for more examiners during her tenure on the panel from 2002-2005, praised the proposal as a much-needed step toward increasing oversight.

"The number of Code 3 credit unions is up, and the mortgage portfolios of many credit unions are more complicated," she said. "We need a cadre of well-trained examiners and to reverse the vacancies caused by attrition, which set a dangerous precedent."

She also said that the process by which NCUA presents its budgets at a public hearing and allows feedback from those it regulates is a bad policy.

"Those being regulated will always advocate having the smallest budget possible. When I told regulators at other agencies about that process, they were horrified."

But former NCUA chairman Dennis Dollar disagreed.

"I am a supporter of open government and feel that more transparency by a federal agency to the public, the stakeholders and the Congress that oversees the agency is always a good thing," he said.

"When I came to NCUA, the budget process was totally behind closed doors and was subject to considerable criticism for its lack of transparency," he added. "I felt in 2001 that opening the budget process for an agency with a budget in the hundreds of millions is good public policy, and I commend NCUA for continuing this open budget process over the past seven years. More transparency in government is always good public policy in my view."

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