Talk about failing to see eye to eye.

State and federal credit unions are at odds over how deeply the National Credit Union Administration should dip into the credit union insurance fund to cover its own administrative costs. NCUA officials are not talking, but both the federal and state-chartered credit unions have trotted out their own economists and released their own studies in support of their arguments.

As in the banking industry, credit unions contribute to the same insurance fund regardless of their charters. The state-chartered credit unions' beef is that the NCUA - which regulates only federal credit unions - taps the share insurance pool for two-thirds of its $146 million budget.

Lawrence J. White, an economics professor at New York University, concluded in a study released Friday that the NCUA's funding method overcharges state-chartered credit unions $30.9 million annually in the form of higher premium payments and lower dividends. The study was commissioned by the state-chartered Boeing Employees Credit Union.

But Tun A. Wei, director of research at the National Association of Federal Credit Unions, disputes Mr. White's findings. Mr. Wei argued that - if anything - the regulator has been too conservative in determining its funding formula. His conclusion: The NCUA actually undercharged the insurance fund by about $3.1 million a year from 1990 to 2000.

Mr. Wei and William J. Donovan, senior vice president and general counsel at the federal credit union trade group, said that Mr. White failed to account for the expenses the NCUA incurs for training and equipping state credit union examiners.

Much as the Federal Deposit Insurance Corp.'s insurance funds do, the credit union fund insures deposits - in its case, at about 10,300 credit unions, nearly 4,000 of which are state-chartered.

The National Credit Union Administration has tapped the share insurance fund to help pay the costs of regulating the roughly 6,300 federal credit unions, which pay lower exam fees as a result, according to Mr. White.

The dispute has a familiar ring to it. For months, Comptroller of the Currency John D. Hawke Jr. has been criticizing the FDIC for essentially the same thing. Mr. Hawke, whose agency regulates national banks, has claimed that the FDIC uses the bank insurance fund to subsidize the institutions it regulates, the state-chartered banks that are not members of the Federal Reserve System. (See related story page 1.)

Though state and federal credit unions have long been at odds over NCUA's administrative costs, criticism intensified last year when the agency boosted the proportion of its budget funded by the insurance pool, from 50% to 66.7%. Shortly afterward, it reduced its examination fees, Mr. White noted.

Ultimately, the NCUA will decide the issue itself. It has commissioned a study of its own, by the Big Five accounting firm Deloitte & Touche, to help it determine what is a fair amount to draw from the share insurance fund.

The outcome is unlikely to satisfy Gary Oakland, president and chief executive officer of $4 billion-asset Boeing Employees Credit Union in Tukwila, Wash. Upon learning of the NCUA's pending study, Boeing commissioned Mr. White's study because it feared that the regulator's report would not settle the matter fairly.

The NCUA is expected to release its study in the fall.

"I have never been given a clear scope" of the NCUA study, Mr. Oakland said Friday. "I question whether it is being conducted simply to validate the numbers NCUA provides, or to test the assumptions governing what is an appropriate transfer."

Mr. White called the NCUA's transfer method a "forced subsidy" of federal credit unions by their state-chartered counterparts. He added that it could undermine the dual chartering system if it continues unchecked.

"An insurer needs a perspective that is unclouded by questions of conflict of interest," Mr. White said. "Unfortunately, that is not the way things are in the credit union arena … [NCUA] ought to quit making these transfers, except for the pure administrative costs associated with the management of the share insurance fund."

But Mr. Donovan said both Mr. Oakland and Mr. White have missed a "fundamental and foundational point," namely that state-chartered credit unions are not required to be part of the share insurance fund.

That so many state-chartered credit unions are part of the fund "suggests that there is a value to federal share insurance that exceeds its cost," Mr. Donovan said.

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