July 13, 2016

The Hon. Jeb Hensarling
Chairman, Financial Services Committee
U.S. House of Representatives
Washington, DC 20515 

The Hon. Maxine Waters
Ranking Member, Financial Services Committee
U.S. House of Representatives
Washington, DC 20515

RE: Launch of hearings on CHOICE Act; five-member NCUA Board

Dear Chairman Hensarling and Ranking Member Waters,

Congratulations on the recent hearing regarding the “Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs Act” or “CHOICE.” This considerable package of reform and regulatory change gives all of us in the financial services sector a great deal to contemplate and consider as we look forward to the remainder of this decade and beyond.

While your hearing Tuesday, July 12, focused on Title I of the proposed legislation, the National Association of State Credit Union Supervisors (NASCUS) has interest in a number of provisions contained in the entire measure. One in particular represents a long-time goal of ours: to increase the membership of the National Credit Union Administration (NCUA) Board from three to five members. As hearings on the overall proposal proceed, we hope you keep in mind the comments about the NCUA Board structure that are outlined in this letter.

For many years, NASCUS – which represents credit union regulators in every state that charters credit unions – has advocated for this fundamental change in the structure of the federal regulator’s leadership body. The NCUA Board has responsibility for the safe, sound, and effective administration of the credit union share insurance fund – and state-chartered credit unions hold nearly 50% of all the assets of credit unions insured by the fund. In our view, expanding the board from three members to five would enhance the board’s deliberative process, expand its collective expertise, and improve the efficient administration of NCUA business.

Some may be concerned that increasing the number of NCUA Board members will substantially expand the budget of the agency. We have analyzed those costs, and we estimate that (based on the 2016 NCUA budget of $290.9 million) each additional board seat would cost approximately $979,000, for a total of just under $2 million – an increase in the agency’s budget (for 2016) of just over two-thirds of 1% (0.67%). This slight increase is clearly not material.

State credit union supervisors believe that the benefits of diversifying the board, obtaining broader views and spreading authority likely outweigh the added cost; in fact, over the longer term, it could even lead to greater budget scrutiny. In terms of efficiency, the benefits are clear: with five board members, two may talk to each other directly without violating sunshine laws, as is the case today.

Chairman Hensarling and Ranking Member Waters, while we have long supported changing the membership size of the NCUA Board, we also would like to work with you to broaden the impact of this provision shall it move forward. That is, by designating one of the seats on the board for a candidate who has served as a state credit union supervisor. Doing so would provide important perspective about the impact of federal regulations on states and local communities – which is sorely needed by all levels of government.

Again, congratulations on the recent hearing, and to continued sessions going forward on the CHOICE Act. NASCUS would welcome the opportunity to work with you.

Best regards,

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Lucy Ito
President and CEO
National Association of State Credit Union Supervisors (NASCUS)
Arlington, VA

cc: The Hon. Rick Metsger, chairman, National Credit Union Administration Board
The Hon. J. Mark McWatters, member, National Credit Union Administration Board