McWatters: OTR action will ‘take some time’

Oct. 5, 2016 -- Noting that NCUA is conducting analysis and developing position papers on the overhead transfer rate, NCUA Board Member J. Mark McWatters Wednesday told the Summit audience that action by the agency on the OTR will “take some time – I don’t know how much.”

McWatters was speaking to the 2016 NASCUS State System Summit in Chicago, which officially got underway Wednesday.

The NCUA Board member said he hoped that the agency will ultimately come up with something to replace the current OTR methodology that is “more standard, more intuitive” than what the agency is now using.

Indicating the complexity of the issue, McWatters told the gathered state credit union system supporters gathered in Chicago that – when he first encountered the issue – “it was a real head scratcher.” He said that he was told repeatedly that the issue was centered on “cost accounting.” However, he added, the more he looked at it, the more he realized that the issue is really a “legal determination.” The law has outlined how NCUA can use money from the insurance fund, and for what purposes, he said – which makes the issue one of a legal determination.

In April, NCUA closed a 90-day comment period on the OTR methodology. Calling the 40 or so comment letters that NCUA received during the comment period “well thought-out,” McWatters noted that – while the letters were far fewer in number than those received on some other, recent issues, such as the thousands of letters on member business lending or field of membership -- the OTR letters were “more dense and difficult.”

In other comments, McWatters noted:

  • He hopes to have a final field of membership rule by year’s end; “it won’t be perfect, but it will be progress,” he said.
  • He had no comment on the ICBA lawsuit against the agency’s MBL rule. However, he noted that – in his opinion – the “MBL rule worked,” or he wouldn’t have voted for it (a judgment he has leveled against other NCUA rules, which he voted against approving).
  • He said “something should be done” to solve the impasse between the states and the federal government over marijuana business banking. “But let’s get this money (from the legal transactions of marijuana in states where it is legal) into the banking system – and let Congress figure it out from there.”

The NASCUS Summit continues through Friday.