Week ahead: NCUA budget, risk-based capital and International CU Day

With CUs around the world celebrating International Credit Union Week, the National Credit Union Administration is set to move this week on issues that have driven the discussion for the last five years and could impact it until the end of this decade.

The NCUA board this week will meet Wednesday and Thursday for briefings and votes on budget matters and amendments to the controversial risk-based capital rule, respectively.

On Wednesday the board will hold a public hearing on its proposed 2019-2020 budget. The agency has proposed a $334.8 million budget for 2019, a 1.1 percent increase over the 2019 funding level the board approved in November 2017 and 4.3 percent over what was approved for 2018. Those increases come even as NCUA has decreased staffing levels, reduced office space and reorganized in order to shrink the agency.

For its part, NCUA contends that when adjusted for inflation, its 2019 operating budget represents a decrease of $624,000.

This week’s meeting is only for public comment, and credit unions can continue to submit feedback on the proposal until Oct. 26 by emailing BudgetComments@ncua.gov. The National Association of Federally-Insured Credit Unions and Credit Union National Association have both commended NCUA for its transparency in the budget process and said they look forward to participating in the comment process.

The National Association of State Credit Union Supervisors continues to emphasize the importance of a low overhead transfer rate in NCUA’s budget, which determines at what point the agency transfers money from the National Credit Union Share Insurance Fund to its operating budget in order to cover insurance-related costs. NCUA has proposed a 60.4 percent OTR which, if adopted, would be the lowest OTR since 2014 and the third consecutive year OTR has been reduced, according to NASCUS. The rate peaked at 73.1 percent in 2016.

A vote on the proposed budget is slated to take place during NCUA’s Nov. 15 open board meeting.

RBC returns

One day after the budget briefing, NCUA will hold its October open board meeting, with modifications to its risk-based capital rule front and center. RBC remains one of the agency’s most controversial rules, having generated record-breaking levels of feedback when originally proposed in 2013, which ultimately led to the board revising the rule and opening up a second comment period.

With the rule set to take effect in January, the board will vote Thursday on whether to delay implementation until 2020 – one year less than a similar bill before Congress, which would force a two-year delay. NCUA board member Rick Metsger last month told a credit union audience in San Antonio that the movement has already had more than enough time to prepare for implementation, comments some trade groups have pushed back against.

Regardless of when the rule takes effect, NCUA will also be voting to amend its guidelines as to what constitutes a complex credit union, shifting the asset threshold from $100 million to $500 million, a move which would drastically reduce the number of credit unions forced to comply with the rule.

Credit Union Journal will have full coverage of the vote.

Celebrating CUs

In honor of International Credit Union Week, CUs worldwide will be using this week to celebrate the credit union difference and showcase the work they do to benefit consumers. Credit Union Journal will mark the occasion with the return of “A Day in the Life of Credit Unions” on Thursday.

Outside of credit union land, the Federal Communications Commission is seeking further public comment around the Telephone Consumer Protection Act (TCPA) in light of the recent decision from the U.S. Court of Appeals for the Ninth Circuit in Marks v. Crunch San Diego, LLC.

The Marks court interpreted the statutory language “expansively” thus asserting that an "'automatic telephone dialing system is not limited to devices with the capacity to call numbers produced by a random or sequential number generator'", asserting that it also extends to devices possessing the capacity to store numbers and to dial stored numbers automatically.

The FCC is seeking comment on what constitutes as an "automatic telephone dialing system" as the agency continues to figure out a solution to the proliferation of robocallers.

With Congress in recess until after the Nov. 6 election, the Senate Banking Committee has postponed a hearing on oversight of pilot programs at Fannie Mae and Freddie Mac, pushing it back until after midterms.