NCUA's 2002 Plans Include Reforming FOM, Investments

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NCUA will take aim this year at potential field of membership (FOM) reforms, amendments to traditional credit union investment authority, and trimming the agency's spending, NCUA Chairman Dennis Dollar said during his first public addresses of the new year last week.

Currently the only sitting member of the NCUA board, Dollar said he has reconstituted the agency's FOM task force with an aim toward again easing FOM restrictions. The NCUA board had agreed to review FOM standards on an annual basis but decided to delay last year's review because of the ongoing legal challenge to the FOM rules enacting HR 1151, by the American Bankers Association. Now that the courts have turned away that challenge, Dollar has reconstituted the task force, which wrote the rules enacting HR 1151, the CU Membership Access Act.

Dollar gave his first public addresses of 2002 last week, first at Genesis FCU to a group of northern Virginia credit union marketers associated with the Northern Virginia Business Development Roundtable, then to the Northern Virginia Chapter of Credit Unions.

Reaching Out To Underserved

Dollar expressed pride that NCUA approved federal credit union expansions covering more than 16-million low- income individuals in 2001 (see story, page 3) and said the hope is to grow that number to as many as 25-million underserved Americans in 2002. Such enthusiasm on the part of credit unions to reach out to the underserved is the best motivation for the agency's recent repeal of the controversial Community Action Plan, or CAP, said Dollar. Those credit unions, he said, must demonstrate a willingness to market to those individuals, as well as to qualify them as members.

NCUA is also looking closely at redefining the permissible investments for natural-person credit unions to take advantage of the changing economic environment, Dollar said. Credit unions have been hamstrung by the limited number of instruments that can invest in this low-interest environment, he noted. The agency has issued an advanced notice of proposed rulemaking inviting the credit union community to make suggestions on how to amend the agency's natural person credit union investment regulation.

NCUA will also continue to work to tighten its budget, said Dollar, who emphasized plans to cut the agency's workforce over the next year. If current plans are successful, the agency will actually reduce its spending by as much as 4% in 2003, he said.

NCUA also plans to streamline operations by: combining its office of administration into the office of chief financial officer; and merging the office of training and development with the office of human resources, saving more than $300,000 a year. The consolidation was conducted under Dollar's Accountability in Management-or AIM-project which will expand this year to review potential cost savings in the agency's six regional offices.

A greater focus on risk, said Dollar, should enhance the agency's ability to trim its spending. The agency's new risk- based examinations, he said, is one example.

By focusing more resources on potential problem credit unions and stretching out the examination schedule for the healthiest credit unions, NCUA should be able operate with fewer examiners over the long run.

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