NCUA: Will 'carefully consider'
NASCUS legal analysis of OTR
June 24, 2015 -- In response to the watershed legal analysis commissioned by NASCUS which demonstrates that the “overhead transfer rate” is subject to notice and comment requirements under the federal Administrative Procedures Act (APA), NCUA has issued a statement noting it would “carefully consider” the study’s conclusions.
The overhead transfer rate (OTR) is the percentage of funds that NCUA annually transfers to its operating budget from the National Credit Union Share Insurance Fund (NCUSIF) to cover “insurance-related expenses.”
On Tuesday, June 23, NASCUS publicly released a legal analysis of the OTR prepared by the Washington law firm of Schwartz & Ballen, LLP. The analysis concluded that NCUA’s adoption of the OTR constitutes a “major rule” subject to the APA notice and comment requirements. A "major rule" indicates the agency action will have a substantial impact on costs, prices, or competition in the industry, and specifically requires the agency to consider the costs and benefits of the rule, and any possible alternatives.
In its statement, NCUA noted it would “carefully consider the NASCUS study’s conclusions to determine whether more formalized stakeholder input about the OTR methodology is warranted.” NCUA also stated it recognized that “the setting of the Overhead Transfer Rate is an important issue for all federally insured credit unions.”
“We, therefore, have regularly reviewed and received stakeholder input and independent third-party analysis on the OTR methodology since the current methodology was adopted in 2001 and most recently in 2011. NCUA also is in compliance with the Administrative Procedure Act,” NCUA stated.
Additional information about OTR reports, reviews and decisions is publicly available in the budget section of NCUA’s website, the agency pointed out in its statement.