OTR takes prominent role in NCUA hearing on Hill
JULY 23, 2015 -- The overhead transfer rate (OTR) played a prominent role, along with some other issues, in a hearing by the House financial institutions subcommittee on NCUA’s budget and operations Thursday, as NCUA Chairman Debbie Matz was pressed by a number of members to provide details and clarity about the NCUA budget process.
In her prepared remarks, Matz noted that to obtain more frequent public input on the OTR “going forward,” NCUA will solicit comments on the rate’s methodology “every three years in conjunction with the public review of the agency’s strategic plan."
In response, NASCUS President and CEO Lucy Ito said that approach is inadequate.
“As the legal analysis we released late last month detailed, the OTR is a rulemaking for the purposes of the Administrative Procedures Act,” Ito said. “That means, the OTR must be subject to notice – in the Federal Register – and public comment whenever the rate is changed – immediately, just like any rule. State-chartered credit unions deserve to know what the elements of the OTR are when it is developed by NCUA, and have the opportunity to comment on it when the rate changes.”
During the hearing, Rep. Mick Mulvaney, R-S.C., pressed Matz on the development of the OTR by the agency. (Mulvaney is the author of H.R. 2287, the NCUA Budget Transparency Act). He pointed out that an unredacted audit report of the OTR by PriceWaterhouse Coopers noted concerns about the lack of formal transparency around such a major component of the budget process. Mulvaney noted that, until recently, a redacted version of the report – which excluded the concerns about OTR transparency -- was posted on the NCUA website. He asked who redacted the report – Matz answered “the office of the general counsel.”
“Following today's hearing, it would appear that the PriceWaterhouse Coopers audit was in concert with our analysis,” Ito said. “The agency should consider these two views carefully, and take action accordingly. Ultimately, we believe that leads to formal ‘notice and comment’ of the OTR,” she added.
With regard to public comment on the agency’s budgeting process, Rep. David Scott, D-Ga., urged Matz to reconsider her approach. "It would not be a bad idea for you to consider having budget hearings," he said.