An industry trade group and the National Credit Union Administration are at odds on how to use funds the regulator holds in reserve.
The regulatory agency is considering using a reserve fund of about $14 million to pay for a planned conversion of its accounting cycle to a calendar year.
The National Association of Federal Credit Unions wants the regulatory agency to use the reserves to reduce the fees it charges credit unions to fund its operations.
"It's proper to give the money back to credit unions by deducting it from the operating budget," said Thomas Hughes, vice chairman of the National Association of Federal Credit Unions, in an interview.
Head of Largest Group
Mr. Hughes, who also is president of Merrifield, Va.-based Navy Federal Credit Union, the nation's largest credit union, wrote to Roger Jepsen, chairman of the agency, to voice his concerns.
The agency's budget year runs from Oct. 1 to Sept. 30 and the insurance fund year runs from July 1 to June 30.
Under the NCUA plan, the new cycle would begin on Jan. 1, 1995. The reserves would fund the three months at the end of 1994, and credit unions would not have to pay an operating fee for those months.
The reserves represent money from past operating fees and interest income greater than the agency's actual expenses. By September 1994, the reserves should total $14 million to $15 million, and underwriting the conversion would cost about $11 million, said Herbert Yolles, controller for NCUA.
Budget Office Approves
Mr. Yolles said that Alan Rhinesmith, program director of financial institutions for the Office of Management and Budget, approves of the proposed conversion.
The board will vote on the conversion Nov. 15. It also will establish the operating fee assessment scale for federal credit unions, which pay for the agency's operating budget along with a transfer from the insurance fund. The insurance fund has been picking up 50% of agency operating expenses.
In his letter, Mr. Hughes said the agency should not link the reserves to the planned conversion. He suggested that the conversion be funded with an additional assessment.
Mr. Hughes said in an interview that the agency has had an "on-again, off-again" commitment to the conversion in the past. He said he wants to ensure that if the conversion is postponed, the credit unions' money won't languish in the reserve fund.
"Anytime there is money of yours in Washington, beware - it ain't easy getting it back," he said.
Ralph S. Swoboda, president of the Credit Union' National Association, the industry's largest trade group, sent a letter to Mr. Jepsen asking for clarifications of the timing of the planned conversion and of the future role of the reserve fund.