From last week
The authority for tapping the NCUSIF for NCUA operating expenses
has always been clouded and is even less clear now when we try to
discover its origins through the fog of time. Twenty years ago when
the insurance fund was building but still relatively small, the
agency began tapping the fund for monies needed for insurance related
work. Over the years, as more and more credit unions had to join
and contribute to the NCUSIF, the fund grew to a tremendous pot
of gold ever more tempting as a source of funds to run NCUA . .
. and the transfer rate has only gone in one direction: higher and
Not surprisingly, the success of the fund has led to regulator
arrogance, which manifests itself in several ways. Despite spending
ever-increasing amounts of money, the NCUA has not bothered to disclose
spending and operating data. With good times, both the regulated
and the regulator tend to get lazy: 'What's another $10 million
here or there?' Oversight on both sides falls off.
Another manifestation of arrogance: considering raising the insurance
fund cap from 1.3 to 1.5 percent. NCUA now has the authority to
do this but has not acted upon it. It needs not the first nor to
do the second. The NCUSIF is huge. The credit union movement is
not in the least in danger.
And last, NCUA has spent a quarter of a billion dollars of insurance
fund reserve over the last 5 years, but in a climate of no claims
and no payouts. Is this kind of spending justified? What has been
the cost to each credit union and each credit union member of this
quarter of a billion dollars?
No Oversight and No Accountability
All this leads to an even larger issue, the lack of scrutiny over
what the NCUA does with credit union money. As presently practiced,
there is an astonishing lack of oversight or accountability. The
NCUA can set the transfer rate arbitrarily and determine its budget
in executive session behind closed doors. It does not have to appear
before a Congressional committee. It operates out there by itself
and no one is the wiser. Only the CLF's borrowing authority is reviewed
When the NCUSIF was capitalized in the early 1980s, credit unions
complained that they couldn't be sure their money was going to be
managed properly. The NCUA then countered by saying it would report
its work to Congress, that when the 1.3-percent cap was reached
it would be required to pay a premium back to the credit unions,
and that the trade associations would oversee the budget process.
These things were done then, but since that time points one and
three have shriveled to ineffectiveness. The NCUA really operates
behind closed doors. We simply do not have the facts about their
expenses, don't know how much they spend on computers or even on
pencils. This is wrong. The money NCUA has is money from the members
of credit unions, and those people have the right to know the facts
about how their money is being spent.