JOPLIN, Mo.–Several CEOs–many holding down pay raises throughout the CU and finding ways to operate on shrinking budgets–are unhappy with NCUA’s decision to hike the agency’s budget by 6.1% next year.
Two CEOs, though, feel the increase could lead to improved regulation.
In a quick poll of credit union execs, what drew a great deal of ire is a proposed compensation increase for NCUA staff. NCUA announced it approved a $14.5-million spending increase for next year, almost all of it to fund the proposed increases in compensation for the agency’s 1,200 employees. The compensation increase, which could be as much as 7.5%, includes increases in pay and benefits and would make up for no raises this year because of President Obama’s freeze on government salaries and are contingent on whether the Congress approves the President’s proposal to lift the freeze this year.
No Pay Raises Here, So...
Cindy Atteberry, CEO of the $23-million Joplin Metro Credit Union, told Credit Union Journal that since NCUA assessments hit her credit union she has not been able to give staff raises due to those extra annual costs.
“We are struggling with the assessments but are hanging in there,” said Atteberry. “This year we had to cut expenses, staff and pare back on so many things. It’s nice to know NCUA will be able to give its staff a very hefty pay increase. Maybe they should put the increase towards stabilization costs and cut back on the percentage they are requesting from credit unions.”
Dale Verderano, CEO of the $140-million Matadors Community CU, Chatsworth, Calif., termed the NCUA budget increase a “slap in the face” of the credit unions NCUA supervises. “A large number of credit unions are tightening their belts, because of not only the bad economy, but also the numerous regulations expected from the NCUA and CFPB that are expected to reduce income and add to expenses.”
Verderano addressed NCUA stating that the proposed pay raises make up for no raises in 2012 due to President Obama’s freeze on government salaries. “Does it take a mandate from the President to stop pay raises when credit unions are having a real bad time?”
Dipping Into the 'Honey Pot’
Stanley Lampert, CEO of Pacific Transport FCU, Los Angeles, suggests that West Coast credit unions boycott the next NCUA town hall meeting or event NCUA Chairman Debbie Matz attends. “Just don’t show up. This proposed increase is outrageous, and I think the agency is out of control. They do it because they know they have a honey pot they can dip into–credit unions–whenever they want more money.”
The $77-million PTFCU has had to lay off staff and cut back in many areas, said Lampert. “We operate on a skeleton crew and since I took over here in 2010 I have not had a raise. If we were paying for a high-performing agency it might be different. But they had grade 13 and 14 examiners on site at WesCorp and they blew it.”
Scott Wilson, CEO of the $460-million SeaComm FCU, Massena, N.Y., was more empathetic, saying he understands why the agency would feel compelled to give staff comp increases. “However, as an industry that is continuing to recover from the worst recession since the Great Depression, the hike isn’t in our overall best interests–especially in light of our continued contributions to the stabilization fund. It is very difficult for us who are contributing to the agency’s increased spending to openly accept a 7.5% increase in compensation and benefits.”
'Expertise Costs Money’
In Washington, Evan Clark’s initial reaction is that the increase does not seem out of line. “The 7.5% increase is not broken down between salary increases and benefits increases. There’s a big difference because so much of benefits increases we have no control over, such as healthcare costs. Secondly, credit unions’ operations and balance sheets continue to become more complex. They require much more expertise on the part of the examiners examining them, and expertise costs money.”
The CEO of the $300-million Department of Commerce FCU pointed out member business loans have the highest delinquency rate in the industry. “And credit unions are gung-ho about going into this area in a big way. That’s all well and good, but if there are more credit unions doing more member business loans then there better be examiners with the expertise to look at them with a professional eye so that member business loans don’t suddenly become the next problem.”
Troy Garvin, CEO of the $89-million Omega FCU in Pittsburgh, agrees that if the pay increase improves the caliber of examiners the agency hires and retains, he has no problem with the increase, noting, however, the announcement’s timing was bad, coming on the heels of the latest assessments.
“If it gets us more trained and qualified examiners who can look at these complex issues the larger and even smaller CUs face, I think the pay raise will be a win for everyone. We won’t again have some of the problems we have faced in recent years, like the corporate crisis.”
But one CEO, asking for anonymity, is not so sure of the pay-raise benefits. “I thought the agency had already addressed improving examiners’ skills and the size the examination force. Plus credit unions are not growing in number, so at what point does the NCUA budget stop growing?
