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NCUA Chairman Matz Testifies before US House Financial Institutions Subcommittee
Friday, July 24, 2015 6:45 AM

National Credit Union Administration Chairman Debbie Matz appeared before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit Committee public hearing Thursday, answering questions about the operations and budget of the NCUA.

“Today’s hearing will mark the first time since 2011 that the NCUA Chair has testified before Congress. As with any federal agency, it is imperative that we conduct vigorous oversight of budgeting and operations. This ensures that the money paid into the system by credit unions is being spent appropriately, and that the taxpayers remain protected by a strong Share Insurance Fund. Further, it ensures rigorous debate of policy decisions made by the NCUA,” said Subcommittee Chairman Randy Neugebauer (R-TX). 

Chairman Neugebauer voiced concerns that credit unions and community banks fall under "one size fits all" regulation, and asserted that without regulatory flexibility the credit union industry is in danger.  

Chairman Matz said her highest priorities are transparency and better communications with industry stakeholders, and she has held meetings across the country and webinars to hear directly from credit unions, not just trade associations, to meet those goals. 

The budget was the primary focus of the questions. Committee members noted that the budget has increased around 9 percent, while the number of credit unions has fallen. Matz explained that the budget needs to keep pace with the size and complexity of credit unions. She also said that the NCUA budget increases are relatively comparable to that of the FDIC.

Although public hearings on the budget were discontinued in 2009, Matz told the committee that the NCUA is the most transparent of all financial regulators and their website contains a great deal of budget information, something no other financial regulator does. Congressman Mick Mulvaney of South Carolina, sponsor of the NCUA Budget Transparency Act, challenged her.

Mulvaney asked about a report by Price Waterhouse on the overhead transfer rate which was redacted and stated that an un-redacted version had differing information than the one on the website. He also said it took 18 months for him to receive a copy of the budget from her office and had received it only the day before the hearing. Several committee members suggested that public hearings would be a way to demonstrate accountability.

Congresswoman Carolyn Maloney of New York said that no one in her district had brought the issue of transparency up to her. Matz testified that the trade associations are more concerned with the issue than are the credit unions.

Other issues discussed covered a variety of topics:

  • Asked if Dodd-Frank had contributed to the decline in the number of credit unions, Matz said the decline began before Dodd-Frank, and there was no evidence connecting the two. She considers BSA to be the most burdensome of the regulations. 
  • Congressman Bill Posey of Florida asked about the timing of moving ahead with the Risk-Based Capital proposal, and Matz said they have considered the responses thoroughly and no further time is needed. 
  • Matz supports supplemental capital for purposes of helping credit unions with the RBC ratio. It was not included in the RBC proposal but would be put out in a separate proposed rule later.
  • Matz explained her request for vendor authority, saying it is necessary to ensure cybersecurity. NCUA is the only financial regulator without that authority now, she stated.
  • NCUA’s human resource policy of "on-the-spot" bonuses was probed by Congressman Roger Williams of Texas. He requested a complete list of recipients and the amounts awarded. There was also a line of questioning about moving the NCUA budget into the regular appropriations process to gain greater transparency of the budget at NCUA.

The following were the key takeaways from the Financial Services Committees' release after the hearing:

Unlike many other federal agencies, NCUA operates independent of the congressional appropriations process, as their operating budget is fulfilled predominately by assessments of the federal credit unions they oversee. In each year since 2008, the NCUA budget has increased but, at the same time, the number of credit unions has dropped by nearly a quarter.  

“I am hopeful Chair Matz will address two issues in particular," Neugebauer added. "First, the NCUA’s budget has increased each year since 2008, sometimes by double-digit percentages. However, during the same timeframe, the number of credit unions has dropped by nearly a quarter. I hope to hear Chair Matz outline clear justifications for this budget increase that does not appear to match supervisory demands.”

Key Takeaways:

  • NCUA needs greater transparency and accountability to support its mission and better protect taxpayers.
  • NCUA has an important role to ensure credit unions remain sound, but there is a clear absence of adequate due diligence in its rulemaking efforts.
  • NCUA is regulating credit unions out of conformity rather than necessity.

A copy of the press release from NCUA after the hearing can be found here

Contact Texas Credit Union Association President Jeff Huffman at 469-385-6488 or for more information.