Forum touches on OTR, alternating exams, 18-mo. cycle

OCT. 30, 2015 -- A 70-minute “open forum” hosted by NCUA Board Chairman Debbie Matz Friday touched on the overhead transfer rate, an 18-month exam cycle, alternating exams with state authorities, the agency’s budget and other issues brought by credit union, vendor and trade association representatives attending the session.

At the opening of the session, Matz told the participants that beginning this year NCUA would be moving to a two-year budget cycle, which, she noted, is something the agency practiced before the onset of the financial crisis. With regard to the upcoming year's budget, Matz said she is "hopeful" to eliminate some “full-time equivalent” (FTE) positions at the agency.
Among issues discussed at open forum:

  • Overhead transfer rate: When asked if the agency had a “goal of reducing the OTR to 50%,” the NCUA Chairman responded the agency has “no goal” on the number for the OTR.“We’re really just plugging in the numbers,” she added. “We’re indifferent.” NCUA Director of Examination and Insurance Larry Fazio added that they agency is not “shooting for just a number, but a fair method” for determining the OTR. Matz also reiterated that the board will be voting in January on publishing – for public comment – the OTR methodology in the Federal Register.
  • 18-month exam cycle: Matz told the group that it was her preference to give the regulatory relief initiatives of the agency more time to take effect before commiting to a longer exam cycle. “I’m not saying no, just that this is not the right time,” she said.
  • Alternating exams with state authorities: NCUA's Fazio said the agency would “take that idea back to state regulators” at the next venue. (NASCUS and NCUA’s next interagency dialogue session is set for next spring in Chicago.)
  • Member business lending rule: After credit union representatives expressed concern that the new, proposed rule should be accompanied sufficient training and guidelines for examiners, Matz noted that the agency intended to provide “intensive training” for the examiner corps. “There’s been quite a bit of angst among the examiners,” she said, noting that the “principle-based” approach of the rule is something new for most of them. Fazio also noted that the agency intends to provide extensive supervisory guidance, which would include what he termed as “guideposts” for examiners as they review credit union commercial lending programs.
  • FOM modernization: Matz confirmed that a proposed rule modernizing the agency’s field of membership rules should be out by January –also noting that the proposal “should be interesting.”

The event, scheduled for two hours, lasted just over an hour; about 10 questions in total were posed to Matz and NCUA officials from the in-person audience.

 

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