CEOs Air 'Grievances'
KNOXVILLE, Tenn.-Saying it's time to stop griping in the background over NCUA's oversight of credit unions, a group of 32 CEOs and CU executives are complaining directly to Congress, asking that NCUA be placed under tighter controls.
Calling themselves the Credit Union Committee on Declaration of Grievances, the CEOs sent a seven-page letter listing their concerns to the House Financial Services Committee.
Noted prominently are NCUA's supervision of the corporates, the hike in NCUA wages and expenditures at a time when credit unions are cutting back, and annual assessments that are placing a long-term financial burden on credit unions.
The letter asserts that CUs are being "drained" by the recent actions of NCUA, as well as other federal agencies, all of which is ultimately harming consumers.
David Proffitt, CEO of the $166-million Alcoa Tenn FCU, said the group of CEOs, based largely in Tennessee, had been complaining to each other about NCUA for the last three years via e-mail and at state and local meetings. "We were tired of complaining to ourselves and in the trades. It was time to put it on paper in a way that had some punch."
The CEO of the $156-million ATFCU said the group came to the conclusion that reaching out to Congress was the only way to get something accomplished, as letters to NCUA have often drawn no response. "We had been complaining for years and most letters were not even acknowledged. We went straight to Congress, and while we have nothing against the trade groups, they have been slow to the table sometimes."
Proffitt said he may have been the first among the Tennessee CEOs to put pen to paper, sent an outline to the group and asked for input and comments. Then a final document was circulated and suggested to be passed onto other interested CEOs. Half of those signing the letter, Proffitt estimated, are outside of Tennessee in surrounding states.
The letter is gaining traction, Proffitt said, having grabbed the attention of U.S. Senator Bob Corker (R-TN), who sits on the Senate Banking Committee. Proffitt said he was told by Corker's staff that the senator plans to review the document and get back to him.
The plan, Proffitt explained, is to resubmit the letter to keep the matter in front of Congress and to possibly add names of the 32 credit unions' board members to the list. "I know many members of Congress don't have the time to read this, so we'll just keep sending it back. By putting board members' names on it, we hope to show that this is not just an issue CEOs who are paid to run credit unions are concerned about. Consumers, taxpayers, and voters have concerns as well."
Number Of Names May Grow
The number of CEO names on the letter may grow, according to Proffitt and two other CEOs already penning the grievance letter. They told Credit Union Journal they have received numerous calls from CEOs inside and outside Tennessee showing support. But fear of NCUA reprisal will likely hold most of them back, one CEO stated. "I have had a lot of CEOs tell me they are interested and would like to sign the petition but are afraid of our regulator," said Becca Montgomery, CEO of the $37-million Covenant Health FCU in Knoxville, Tenn., who signed the grievance.
Another grievance committee member, Denise Cooper, CEO of the $25-million Upper Cumberland FCU in Crossville, Tenn., confirmed that many CEOs still prefer to remain in the background, but agree that it's time to "come forward and speak up about their true feelings on all these regulations and assessments."
Montgomery reminded that the issue is that NCUA is not accountable for its actions. "They are a loose cannon, a runaway train. I would be accountable to my members if I spent the kind of money they have, and they should be accountable to us. It's like they have an open pocketbook and come to us when they need money."
Todd Harper, NCUA director of public and congressional affairs, countered, saying NCUA is in fact answering to Congress. "Chairman Matz, in December, was testifying before the Senate Banking Committee."
Harper pointed out that the agency's actions over the last 18 months have prevented more than $1.5 billion in losses to the NCUSIF, saving CUs further expense. About the debate over the agency's pay raises, Harper responded, "In 2009 we found we had fewer staff than we did in 2000 and we needed to step up our game in order to improve our oversight of credit unions. As a result we increased our budget by 12% this year and 13% the year before. But it's important to take a step back and look at what the FDIC did-a 55% increase last year an 81% the year before."
The grievance letter supports what many CEOs believe is growing discontent with NCUA that is sparking public debate. Randy Karnes, CEO of the Grand Rapids. Mich.-based CU* Answers, circulated an online petition calling for Congressional oversight of the NCUA board and splitting the NCUSIF from the credit union agency (CU Journal, Dec. 23). A number of credit union leaders went on record with Credit Union Journal on Feb. 28 questioning whether NCUA is up to the task of regulating credit unions.
Stuart Perlitsh, CEO of the $305-million Glendale Area Schools FCU in Glendale, Calif., was one CEO who told the Credit Union Journal that NCUA is not up to the task of regulating CUs. His credit union is among the seven CUs that filed a lawsuit against WesCorp, and he hopes that action has helped to spark open debate over NCUA's capabilities.
"I am confident that in some small way the seven credit unions that stood up to NCUA in our lawsuit have inspired others to do the same. The letter to congress further validates our complaint. Credit unions have now come to realize the state credit union leagues, CUNA and NAFCU are part of the problem and are no longer the solution."