Month: April 2021

Nature at work and play

As credit unions increasingly challenge NCUA’s funding from the overhead transfer of expenses (OTR) to the NCUSIF, and the record buildup of cash (over $110 million) in the operating fund, the Board approved an unprecedented Request for Proposal (RFP).

Chairman Harper said the board’s unanimous support is an “innovative response” to credit unions’ concerns over ever increasing agency operating costs. “We need creative ways to meet our growing financial responsibilities. This RFP also grew out of suggestions by credit unions themselves.”

Vice Chairman Hauptman, the newest board member, was equally supportive of the initiative to bring private sector “best practices” to the agency.

Building Naming Rights

Hauptman specifically singled out the idea of selling naming rights to the Agency’s Alexandria head office. The concept was raised by PenFed during the agency’s recent approval of their 21^st merger. The nation’s third largest credit union had been seeking a building in the DC area on which to display its brand. The proposed wording: PenFed Tower with the tag line, Anyone Can Join. Their initial offer was for five years with a yearly fee of $5 million. The amount was coincidentally the same as the ONES office’s annual budget. (ONES: Office of National Examination and Supervision)

Educating CURE (Credit Union Resources and Expansion)

State Employees Credit Union NC had earlier met with the director of NCUA’s CURE concerning the disappearance of small credit unions and lack of new charters. “Without these smaller institutions the largest credit unions will not survive,” said Mike Lord, SECU’s CEO. “Our foundation normally limits its contributions to North Carolina projects. We offered to fund 100% of the tuition for every CURE employee to complete the Credit Union Development Educator (CUDE) program. Once CURE staff understand how credit unions are conceived, we think a wave of de novo charters will follow.”

Sponsorship of Monthly Board Meetings

To provide upgraded video technology for board meetings, the RFP also seeks interest in sponsoring the Board’s monthly open board meetings. The caveat is that messages cannot be a narrow promotion for a single credit union.

Any messages must have the character of a “public service announcement, like those on NPR,” said the Director of NCUA’s office and external and public affairs (OEPA). For example, a promotion for “better banking with XYZ Credit Union” would not be permitted. Whereas Navy FCU’s, Our Members Are Our Mission, would be acceptable.

Naming the Chairman’s Office

To avoid future public relation embarrassments when new Chairman furnish their assigned office, SchoolsFirst CEO has offered to endow an office renovation fund in perpetuity. The CEO gave two reasons for the credit union’s munificence. “I know what it’s like working in DC under attack from all sides. Plus, our credit union is thankful for the $360 million in additional capital from our merger with Schools Financial CU in 2020. I think it is important to show a little gratitude for NCUA’s generosity with Schools Financial member’s accumulated wealth.”

Publication Sponsorships

One of the agency’s most used publications is Truth in Mergers. Several credit unions expressed strong interest in underwriting future editions. Infinity FCU’s request to sponsor was deemed premature as their merger with Deere has yet to be approved.

However, the Director of Supervision for NCUA’s Western Region suggested the update be named for Andigo Credit Union. Their members voted 32,494 to 0 to merge with Consumers Cooperative Credit Union on April 9, 2020. Consumers added over $100 million in reserves from this unanimous member vote. “They could easily pay 1% of this added capital for endorsing this indispensable agency guidance,” the Director suggested.

Internal Staff

Agency staff involved in drafting the RFP volunteered other ideas for “naming” dedicated spaces.

For example, the Director of Examination and Insurance (OEI) suggested the rooms where NCUA examiners are provided on-going training be named after a former NCUA examiner, Edward Rostohar. As an NCUA employee Rostohar was so well-schooled that, for two decades as CEO of CBS Employees FCU, he went about a $42 million embezzlement no other examiners were able to detect.

Another NCUA staff recommended approaching CUNA Mutual. The company recently acquired Assurant’s Global Prearranged Funeral and Final Expense Business. Staff thought this new business’s purpose aligned perfectly with NCUA’s Asset Management Center (AMC) which disposes of failed credit unions. CUNA Mutual’s promotional support would not only reduce the cost of future liquidations but also offer members of failed credit unions a unique cooperative end-of-life burial option.

Next Steps

Once published in the Federal Resister, comments will be accepted for a 60-day period.

The Agency emphasized the urgency of receiving as many responses as possible before this year’s budget cycle begins.

Chairman Harper was enthusiastic about this innovative effort: “This is a unique opportunity for the cooperative community to increase their support of NCUA. It is a win-win for all. A third versatile funding option is opened up for NCUA. Credit unions can choose to participate or not. New promotional and endorsement options are limited only by our collaborative imagination.”

The chairman also reminded credit unions that the agency’s concurrent Request for Information (RFI) seeking applications for artificial intelligence (AI) use in the Agency are due at the same time.