Callahan & Associates Chairman Chip Filson and his Co-Ops for Change campaign challenged theNCUA's audit of the National Credit Union Share Insurance Fund's2013 financial statements.

Although the clean opinion was presented accurately from anaccounting standpoint, Filson said in an April 17 release, itoffers little value, due to flawed methodology revealed from backtesting and no discussion about the results.

Specifically, Filson said the fund's expense provision forlosses has no correlation to actual net losses incurred last year.Additionally, he said, the Central Liquidity Facility does notspecify if the NCUSIF or CLF member credit unions would receivefirst access to the credit line in a liquidity crisis.

Filson also questioned the increase in the overhead transferrate charged to the NCUSIF, from 52% in 2008 to nearly 70% in2014.

“The analysis shows huge fluctuations, no real patterns andlittle correlation between how NCUA estimates its provision expenseand actual cash losses,” Filson said. “The graphs demonstrate thelack of any consistent accounting relationships.”

The former NCUA director of examination and insurance said he'sconcerned the NCUA operates the NCUSIF at a breakeven level,resulting in the overhead transfer rate increase. Subtracting the2014 transfer rate from projected NCUSIF investment income leavesnothing for provision expense, Filson said, let alone additions toretained earnings to keep up with share growth and the 1.3% normaloperating ratio.

“When you take a look at the (NCUA's) performance record, it'salarming because the agency is seeking even more control overindividual credit unions’ financial decisions through the proposedrisk-based capital regulation,” he said.