The two main credit union trade associations are divided on a proposal by House Financial Services Chairman Jeb Hensarling to expand the size of the National Credit Union Administration's Board of Directors to five members from three.
The National Association of Federal Credit Unions said it "opposes adding new positions to the NCUA board, particularly for its potential impact on the agency's budget and the fees credit unions pay to fund that budget through operating fee assessments."
NAFCU added that it "continues to review plan details for their potential impact on credit unions."
But Ryan Donovan, chief advocacy officer at the Credit Union National Association, said that CUNA has "historically supported legislation to expand the NCUA board to five members."
Hensarling (R-Texas) recently released a broader draft legislation that is designed to replace the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The overall package includes calling for the establishment of a Credit Union Advisory Council at NCUA and also proposes new laws to require greater transparency on the overhead transfer rate at NCUA.
NCUA declined to comment on Hensarling's proposals. "We have not had the opportunity to review the proposed legislation," said John Fairbanks, a spokesman for the regulator.
Geoff Bacino, a former NCUA board member as well as a former member of the Federal Housing Finance Board (now the Federal Housing Finance Agency), noted there could be some logistical and cost issues with an expanded NCUA board.
Bacino, now a partner at Bacino & Associates in Washington, told Credit Union Journal that during his tenure on the Federal Housing Finance Board, he was a "staunch advocate" for a multi-person board rather than a single administrator.
"In the case of NCUA, which already has a board, the suggestion to increase the size only begs two questions: would it alter the make-up of the board as some have lobbied for a state regulator to fill one of the spots; and what is the final cost," he noted.
Adding two new board members, according to Bacino, would mean six more full-time hires (the two board members, two policy advisors and two executive assistants); as well as changes to the physical building of the agency.
"[NCUA] is now set up for three board offices and would have to build out to accommodate two more members," he added. "It is an interesting concept, but one that might spend years in debate."
Bacino, however, said the presence of more experience and broader opinion on the board would be a good thing for NCUA and would "help the process."
Dennis Dollar, a former NCUA chairman and now a consultant to the credit union community, also referred to the higher costs associated with an expanded board.
"Philosophically, I almost always come down on the side of smaller government so my inclination would be to say that, with staff and other administrative costs, a five-member board is going to be about 66% more costly than a three-member board for the credit unions that pay the bills at NCUA," Dollar told CU Journal.
However, he noted that the current two-member NCUA board situation with one of those members nominated to another position and the other with a term ending next year "does make one question whether there might perhaps be more stability and likely less potentially a stalemate on important issues with a five-member board."
Paul Gentile, president and CEO of Cooperative Credit Union Association, a trade group for CUs in Massachusetts, New Hampshire and Rhode Island, also noted there could be some benefits to an expanded NCUA board.
"I think additional board members could provide new perspective for the credit union system and give us more people to dialogue with," Gentile told Credit Union Journal. "That would be a good thing. As for the budget concerns, if you have a highly functioning board, they might be able to find cost savings elsewhere. The budget shouldn't be the sole reason not to do it. There's value in good governance and NCUA has plenty of areas to find cost savings."
Entitled the "Financial Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs (CHOICE) Act," Hensarling's proposed legislation would also seek to repeal the Durbin amendment on debit interchange - something NAFCU said it is "strongly in favor of.
The sweeping legislation also calls for the NCUA to hold annual open hearings regarding its budget; certain well-capitalized and well-managed credit unions be eligible for an extended eighteen-month examination cycle.
In addition, Hensarling's outline also calls for the removal of the director of the Consumer Financial Protection Bureau and the Treasury representative from the five-member Federal Deposit Insurance Corp. board - meaning the FDIC would have five independent board members.
Hensarling also proposed the replacing of the director position at CFPB by a bipartisan, five-member commission.
