UPDATED: Bill requiring OTR transparency introduced in the House
July 18, 2016 -- (Updated with bill number) Legislation requiring the NCUA Board to provide a rationale for any amounts it proposes to use from the share insurance fund – particularly through the overhead transfer rate (OTR) – has been introducedin the House by Reps. Mick Mulvaney (R-S.C.) and Denny Heck (D-Wash.)
The bill, HR 5869, would require the NCUA Board to accompany each annual budget with a report (which must be made publicly available) that contains a “detailed analysis” of how agency expenses are assigned between prudential activities and insurance-related activities.
The report would also require an analysis of the extent to which expenses are paid from fees collected from federal credit unions (via operating fees) and the agency’s rationale for any “proposed use of amounts in the Fund contained in such budget, including detailed breakdowns and supporting rationales for any such proposed use.” Those funds typically are transferred to the agency budget via the OTR.
The Mulvaney-Heck legislation mirrors language contained in the Financial CHOICE bill, announced by House Financial Services Committee Chairman Jeb Hensarling (R-Texas) last month.
Three weeks ago, Mulvaney told a Washington group of his intent to introduce the bill. A bill number has not yet been assigned.
NASCUS President and CEO Lucy Ito said that transparency in the calculation of the overhead transfer rate is much needed, and this legislation would go a long way to bringing that about. “At NASCUS, our goal for years has been to give the credit union system the opportunity to evaluate and respond to NCUA’s allocation of expenses – and this measure, once enacted, will be significant in helping us reach that goal. However, we do believe that the determination of the OTR should rest with the NCUA Board, and not the staff. Our thanks to Rep. Mulvaney for drafting and introducing the bill, and to Rep. Heck for his original co-sponsorship. We look forward to working with them as the legislative process moves forward.”