It became clear at a public hearing on Wednesday that National Credit Union Administration Chairman Todd Harper does not have the votes to expand the agency’s consumer protection examinations and to hire new employees to do it.
Based on testimony given at the public hearing on the 2022 NCUA budget, that is fine with much of the credit union industry.
“We have known for decades that the NCUA has maintained too light of a touch in overseeing consumer financial protection and fair lending,” Harper said, in explaining the 2022 budget proposal. “There is a real need for us to strengthen our commitment in this area.”
But board members Rodney Hood and Kyle Hauptman said they could not support hiring additional staff to expand exams. Instead, they said that if the agency has the money to expand its staff, it should return excess funds to credit unions.
“The budget before us is a non-starter,” Hood said.
The NCUA board will consider the budget at its Dec. 16 meeting. Hood pointed out that gives board members little time to forge an agreement on agency spending next year.
The budget reflects Harper’s desire to place a higher priority on consumer protection.
The draft budget includes plans to expand the number of credit unions that will receive annual exams as a result of the economic strains caused by the pandemic. That proposal will necessitate the hiring of an additional 29 examiners, NCUA Chief Financial Officer Eugene Schied said during the hearing. He said the budget also includes five new employees in the agency’s Office of Consumer and Financial Protection. Overall, the budget calls for an additional 48 new positions in the agency.
Hood made his opposition clear.
“I do not think we need nearly 50 new staffers at the agency, so this budget is not something that I can support in its current form,” Hood said. “Additionally, I also do not see how I can support a budget that does not return money from the Operation Fund back to credit unions in a significant way, something that I first called for earlier this year.”
Hauptman agreed. “I don’t think this is justified, given credit union performance over the last quarter,” he said.
Mike Schenk, chief economist at the Credit Union National Association, told board members that the NCUA has not sufficiently explained why new examiners are needed. “There is no detail about whether there is a compelling need for new employees,” he said. He also questioned the need for the increased focus on consumer protection, adding that the agency does not “need significant expenditures to protect members from themselves.”
Ann Kossachev, vice president of regulatory affairs at the National Association of Federally-Insured Credit Unions, said the budget overlooks opportunities for efficiency and to return excess funds to credit unions. She questioned whether new employees are needed for consumer protection exams without evidence of substantive risk.
Virginia Credit Union League President/CEO Carrie Hunt also questioned whether the agency needs “to recalibrate how it deals with risk.” She added, “I don’t think the agency has presented enough justification for this assessment.”