ALEXANDRIA, Va. — The NCUA Board this morning approved a $23.1-million rise in spending for next year, its largest increase ever, to help deal with the growing number of problem credit unions.
The new funds will help hire another 74 staff, 57 of them examiners-on top of 50 new examiners hired this year-to help implement a more frequent examination cycle and tighten monitoring of at-risk credit unions. Another 39 examiner hires are planned for 2011.
'Extraordinary Times'
"I realize the projected increase in dollar and in (staff) seems extraordinary, but we're living in extraordinary times," said NCUA Chairman Deborah Matz. She noted the growing number of so-called CAMEL 4 and 5 credit unions, designated as troubled institutions, as well as increasing numbers of CAMEL 3s, those on the cusp of serious troubles. "If we don't take corrective action now, today's CAMEL 3s will become tomorrow's CAMEL 4s and 5s." said Matz, who called today's climate "an unprecedented time in credit union history."
In addition, NCUA said losses for the National CU Share Insurance Fund increased by $171 million in October, to more than $560 million so far in 2009. Most of October's losses are believed to be related to three big federally insured credit union failures in Nevada.
In order to deal with the continuing problems in California, NCUA said it is moving Jane Walters, one of its senior regional directors, back to Virginia-based mid-Atlantic Region Two and assigning her supervisory responsibilities for California, which she once oversaw. David Marquis, executive director of NCUA, referred to the move as "triage" and said Region Two has a significant number of senior examiners available to deal with the continuing troubles among the state's credit unions. In addition, supervision of Alaskas's 11 credit unions will return to Region Five, from Region Two, where it as moved earlier this year.
The new examiners will allow NCUA to speed up implementation of its plans to examine each credit union on an annual basis, something it has been working toward for three years. The annual examination program will include more frequent on-site contact with problem credit unions and enhanced off-site monitoring. Next year's budget also includes three additional hires for the agency's Austin, Texas-based Asset Management Assistance Center which helps liquidate assets from troubled credit unions.
Next year's $201 million budget will also include $1.5 million to fund a new office of consumer protection at NCUA, which will help NCUA and the credit union lobby to convince Congress to leave them out of plans for a new Consumer Financial Protection Agency.
Office of Chief Economist Recreated
The budget will also incude $344,000 to recreate an office of the chief economist, which was scrapped almost 20 years ago after the death of the agency's then-chief economist.
Most of the new spending, more than $20 million worth, will be paid for by transfers from the NCUSIF. Operating fee rates assessed federally chartered credit unions will actually decline by 1.5% because of a projected 8.5% growth in assets for federal charters.
Marquis assured the NCUA Board members the agency had been through difficult times before, citing the '80s when as many as 500 credit union were being liquidated in some years. "We've been here and we've done it before," he said.
