Washington--The NCUA should boost its Share Insurance Fund by folding the temporary corporate stabilization fund into it, NCUA Acting Chairman J. Mark McWatters said Tuesday.

“It is important that the agency maintain a strong Share Insurance Fund for the mutual benefit of the credit union community and the taxpayers,” Mc Watters said in a speech during the second day of CUNA’s Governmental Affairs Conference. “It is also important for the NCUA to avoid or minimize any insurance fund premiums, whenever the agency may do so responsibly, and keep that money at work in the credit union community.”

McWatters said the insurance fund’s equity ratio ended 2016 at 1.27%, below the board-approved normal operating level of 1.3%. Folding the stabilization fund into the insurance fund would help the insurance fund, with the goal of being able to rebate surplus funds to federally insured credit unions.

During the speech, McWatters outlined his other goals as chairman. He said that President Trump has issued several executive orders affecting regulations at federal agencies. As an independent agency, the NCUA is not subject to those executive orders.

He added, however, that, “I assure you the agency will abide by their spirit and intent because the credit union community faces an array of ill-conceived and wholly unnecessary regulatory burdens.”

McWatters said the agency should scrub its budget for potential savings, including an evaluation of the current regional office structure.

He said that the NCUA also should continue to negotiate changes to its corporate credit union legal services contracts, adding that outside attorneys already have been paid more than $1 billion. He said that the legal bill is the highest contingency fee ever paid by a federal agency to private sector law firms.

The acting chairman said that the NCUA should revise and finalize the second field-of-membership rule. That rule should provide enhanced due process rights for those who wish to register public comment regarding certain proposed community-based field of membership applications before they are finalized by the agency.

He also said he wants the agency to issue its proposed rule on supplemental and secondary capital.

McWatters said the NCUA should continue its review of the extended examination cycle for well-run credit unions, including the possibility of providing virtual examinations. He added that the NCUA should evaluate whether the stress testing rule for the largest credit unions is calibrated correctly.

McWatters also said the agency should explore ways to help low-income credit unions qualify as community development financial institutions—making them eligible for Treasury Department grants and loans.

In his speech, board member Rick Metsger said he and McWatters have developed a close working relationship during the past ten months.

Metsger said that Congress should repeal the hard cap on business lending by credit unions.

Instant Insights /

McWatters: Fold Stabilization Fund Into Insurance Fund: GAC

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