Category: NCUSIF

There are two agenda item’s for Thursday’s meeting:  approval of the 2026/7 NCUA budget and a report on the financial status of the NCUSIF.

This will be the first board meeting since September 18.  Chairman Hauptman has implemented a practice of holding meetings only when needed versus. a fixed monthly event.

The Critical Decisions for the NCUSIF

This year end financial estimate for credit union’s unique cooperative fund is more than a financial update. In the past, this meeting has set the upper cap on the Normal Operating Level (NOL)which determines when the surplus from fund  earnings must be returned to credit unions as a dividend.

A dividend from NCUSIF operations has not been paid since 2008.  The dividend demonstrates  stable performance by the industry.  It also acknowledges credit union’s evergreen commitment to main 1% of insured shares as the principal earning asset for the fund. In contrast the FDIC relies primarily on open-ended premiums assessments for its revenue.

The Latest NCUSIF Financials

As of the October 2025 financials posted yesterday, the fund’s full year outlook is very positive after the first ten months.

Net income of $222 million is $10 million greater than the same period last year with operating expenses near the same level at $204 million.  The provision for future losses is funded to $240 million up  $10 million from a year earlier.

The fund’s yearend external audit is underway.   Assuming no surprises, it is straight forward to forecast the probable yearend outcome and the ratio of fund equity to insured shares.

This dynamic spread sheet model using actual data for the first ten months, estimates a yearend ratio of .3101 of retained earnings to insured shares.  The historical upper cap from 1984 initial implementation to 2017 in the NCUSIF was .30.   This cap was only raised in 2017 to accommodate temporarily an influx of funds from merging the TCCUSF surplus. This current projected earnings would result in a dividend of $200-$250 million with a30 NOL cap.

A Unique Leadership Opportunity

After the year end true-up of insured shares, the total ratio of 1.3% means the NCUSIF is fully funded.  In addition, there is more than $240 million in reserves, already expensed, to cover insured losses.

Chairman Hauptman is in a unique position to re-establish he NCUSIF’s historical cap of 1.3%.  Until the 2017 short term incease in the 1.3% cap, the  upper limit was unchagned even in the 2008/9  financial crisis, Dividends were a regular outcome in the first thirty years following the 1984 redesign.

The federal credit union act authorizes three board members.  As the lone member currently, Hauptman has a chance to restore the fund’s historical cap.  Sooner or later via court action or administration appointments, additional board members will be in place. It is now possible to reaffirm the original legal compact with credit union for supporting the 1% open-ended funding model in return for a stable upper NOL limit.

Restoring the 1.3% NOL cap authorizes  returning  credit union funds to credit members.  It demonstrate the administration’s intent tp limit the inherent tendency of government to always seek greater amounts of money to spend.

Most importantly it reinforces the unique cooperative model of the NCUSIF for credit union members and the public.  Credit union’s collective fund is different-by design.

Finally such action would implement Hauptman’s intention to return to the fund to its 1.3 NOL as stated in December 15, 2022 NCUA board discussion of this issue.  From his statement on the issue that meeting:

I appreciate the additional information on how the Normal Operating Level is calculated. We need more of this kind of transparency. In the spirit of more transparency, I ask that we acknowledge our responsibility to show why 1.30 is not adequate — as I said, every basis point over 1.30 is money credit unions could be investing in their members.  (link)

America is not living in a normal period of federal governmental conduct.  Trump’s largest campaign donor ($275  million) Elon Musk was given a non-legislative, non-elected temporary position. Thus informally  empowered,  his DOGE teams have gone into every federal government and some non-governmental organizations to mandate staff and program cuts.

These cuts and program closures are of Congressionally authorized programs and spending.  This is a pure power play with no oversight, accountability or  any formal authority.

It is total power without limits. In a democracy those who are appointed or elected to positions of power are called leaders.  In an authoritarian government, these individuals are called rulers.

A Fight for the Cooperative System’s Integrity

On April 16 President Trump removed the two Senate confirmed democratic members of the NCUA board. Only Chairman Hauptman, a republican whose term ends this August, remains.  There was no reason given in the firing email. Sue me if you don’t like it.  And both fired members have filed suit in federal court.

The power of both law and precedent suggest this action is illegal.  It raises substantive questions about NCUA’s authority and future.  The bottom line is credit unions are in a fight for the financial and legal integrity of their system.

Some credit unions will want to wait and see what happens before acting.  Others will delegate the burden and pay someone else to chart the way forward.  Many will just go on with business as usual.  With all the uncertainties in DC the assumption is that NCUA is at best pre-occupied, or at worst NCUA won’t dare buck Trump’s deregulation stance and stand up to credit unions.

One long-time reader suggested another approach: There is no reason to stand by this board, or jeopardize your voice by association.  They were neither effective as administrators nor wise enough to see the fog of the last administration. .  .

Why not push for the quick organization of a new board and the forward progress it might bring.  In the very least be ready to work with this administration and keep the CU agenda clear of the fall out that will follow.

That presumes a democratic, participatory system.  That is not what we have as illustrataed by yesterday’s announcement of the larest credit union liquidation in at least six years.

The Unilever FCU  Liquidation

Here are the facts last published by NCUA about this sudden $47 million credit union liquidation announced by NCUA on April 30.

At December 30, 2024, Unilever’s total assets were $ 46.7 million; net worth, $4.1 million (8.95%), virtually no delinquency on a portfolio of which 90% is real estate loans.  There are five employees, a single office, and very high average share balances ($29,400) and loans ($58,502), while serving just 1,448 members.

No conservatorship was announced. Instead an immediate takeover with no announced effort to find a merger solution.  No facts or explanation for the los was provided except to say the credit union was insolvent. What caused this sudden loss discovery? Why the instant liquidation?

The absence of any facts or reasons for acting suggests another regulatory-supervisory failure that is just being expensed away with insurance funds.

It reminds one of the situation last July when NCUA suddenly discovered that Creighton FCU had lost 20% of its value in the days right after filing its March 2024 call report.  The newly discovered loss was approximately $13 million in a $67 million FCU.  The credit union was merged with Cobalt FCU. There was no NCUSIF expense.  And no explanation of where the money went.

In the Unilever case, Hauptman, a one-person NCUA board, approved the outcome.  There is no evidence in support of this action.  Zero transparency for the members and the public.  This is what one person rule creates.  Is Unilever just the first of a series of unilateral decisions by Hauptman?

NCUA’s Defense of a One Person Board

On April 18, 2025 two days after the two board firings, the agency published an internal staff memo on the current state of the NCUA Board.  The memo was unattributed and contained no statements by any NCUA person.  It was just an anonymous assertion with these points:

Please be assured that the NCUA has precedent and standing delegations of authority in place to continue performing all operational and statutory requirements under the authority of a single Board Member. No statutory authority, internal legal opinion or other objective fact was provided to support this “assurance.”

In support of this undocumented position, the agency referenced a purported past event:

“During the Bush Administration (2001–2002), Chairman Dennis Dollar acted as a sole Board Member. He held a Board meeting, voted, and took several actions, both administrative and operational. Chairman Dollar recently stated in an article  in CU Today, “The records are in place at NCUA from 2002 that clearly establish the precedent that the Chairman can act as the Board.”

This statement is the most problematic of all.  Immediately after the board firings, Dennis Dollar called them “unprecedented.”  But a day later he claims that his prior tenure is now the precedent to follow this unprecedented event (see same article).

However NCUA presents none of the “records” that Dollar says are in place and certainly references no legal opinion.

What is even more curious is that the official NCUA 2002 Annual Report page 13 states:

Board members confirmed

The highlight of NCUA’s legislative year occurred March 22, 2002, when the U.S. Senate confirmed JoAnn Johnson and Deborah Matz, both serving as interim appointees, to join Chairman Dennis Dollar to complete the three-member NCUA Board.  

According to NCUA’s public account, Dollar’s two colleagues were indeed present, serving as interim appointees. There is no mention of his taking any action to set a precedent for one person rule to be followed in the future.

Following NCUA’s circular reasoning in citing a former board member and then that person confirming it is OK to do so, NCUA closes its staff update saying:

“It is the NCUA’s long-held view that a single Board Member constitutes a quorum when there are no other Board Members. Chairman Hauptman and NCUA’s leadership are equipped with the required authorities to continue implementing the Administration’s priorities. . . 

The memo asserts an  anonymous long-held view with zero factual, no legal reference nor any public prior event where this opinion was expressed.  The long held view is  an argument made of whole cloth.

One could just have easily asserted that in any organization’s bylaws or chartering authority where a  quorum is required, the term presumes more than a single board member is necessary to conduct business.  That is a more reasonable understanding of the quorum requirement.

So instead of clarifying Hauptman’s authority as Chairman, Vice Chairman and board member, the three-in-one board situation now, the agency presents a shallow, undocumented explanation to the staff and the public.

What’s at Stake this May Day

The rule of law is at stake.  NCUA has become a basterdized agency with no apparent legal grounding.  Fire the board and turn the agency into  one person rule,

This is the reason for the Unilever FCU unexplained liquidation is so important.  For the most consequential action the regulator can take versus a credit union is to put it out of business with no due process or public accountability.

The action was intended to demonstrate we’re really in charge now.  It is the largest liquidation in six years or longer.  A first example of how  the agency now “will ensure America’s credit unions are safe and sound.”   And if this arbitrary assertion of power can happen to Unilever FCU, it can happen to any credit union.

Credit unions today are confronting a situation where the entity charged with overseeing the legislation and regulation protecting the system, is itself acting extra-legal, unable or unwilling to even defend its current board status.   In other words the agency which enforces the law cannot defend its own legal standing.

Where are the agency’s lawyers so quick to explain the agency’s legislative interpretations?  Did they challenge the firings?  Brief Hauptman?  Were there resignations on principle if there was an obection?

Every NCUA employee took an oath to support the constitution, not a specific person in power.  Where are those individuals of courage and character in the agency?  Silence is consent.  Consent is capitulation.  That is the end of the credit union democratic experiment, unless there is a MayDay uprising starting now.

Learning when to speak up is an art in both personal interactions and leadership of a public agency.

Words are critical in times of crisis and uncertainty.  But the three NCUA board members  have embraced silence as their preferred form of leadership.

Emptying Out the Federal Government

Entire agencies in Washington and across the country are being dismantled and staff arbitrarily let go.  Every agency  including the FDIC, the FTC board  (an independent agency) and all those on which the public relies from the CDC/NIH, to the VA and Social Security are being taken apart.

These radical reductions are not about fraud or efficiency.  It is to break these agencies’ ability to deliver their basic services to the public.  Services approved and funded by Congress.   It is an attack on the core responsibilities of government and the citizens which depend on these services.

Where is the NCUA Board?

For at least the past year, the NCUA board members have been literally missing in action.  There have been extended member  absences due to medical or family leave.

Borad meetings have been routinely cancelled.  Scheduled meetings have had micro agendas such as updates on internal programs while the difficult challenges of credit union direction are ignored.  These chalenges include the growing spree of bank acquisitions and the pillaging of credit union member reserves by CEO’s in mergers,

Their inaction has been bipartisan.

The Current Uncertainty

This month the press reports NCUA has held two closed board meetings to discuss “personnel matters.”  It is obvious the agency must respond to the administration’s imperative for drastic staffing cuts.

This is an issue that affects every credit union and its members.  This is not about policy, but the abillity of the regulator to do its core job of examination and supervision.

In a democratic system, the ultimate arbiter of power are the people.  In town and city across the country individuals are rising up to protect their interests responding to the disabling of key government functions.

But no one is standing up for NCUA because there is nothing to stand up for.  No plan, no pending organization redesigns.  Total silence.

When the time comes for action to protect credit union interests, there will be no platform to defend.  The troops will have been off fighting for CDFI funds, or to modify the CFPB’s structure or a myriad of other potential changes sorted out in every other part of government.

Moreover all this time the industry will reserve its biggest efforts and in conversations with top leadership in government, protecting credit union’s federal tax exemption.

No federal government agency can save itself from a targetted effort by political leadership to tear it down.  Only the public who rely on these services can do so.   And it is happening.   Because the press and agency employees and former employees are speaking up in other purges to inform the public about what is happening.

But not so at NCUA.   This is not the time for board silence.  Rather united efforts balancing new realities with ongoing responsibilities should be presented as in everyone’s interest.

Where is that plan and the basis for credit unions and their membersto support it?

Recently I contacted the Library of Congress (LOC) to see if they had copies of Report on Credit Unions.  This monthly printed publication was begun in January 1957 and continued through the mid 1980’s.

Here is what the librarian found in the search of their records:

I am sending you the title page of the Report on Credit Unions published in January 1957–the only issue we have in the collection. I also noticed that it was cataloged as a monograph, not a serial. 

I ran another search in the Ulrich’s Periodicals Index using the ISSN number–I have attached the record from Ulrich’s as well. Ulrich’s shows a different publisher, but the original publication might have been bought at some point by CoVest Reports, Inc. listed in Ulrich’s. The serial appears to have been a bi-weekly newsletter which might be the reason it wasn’t collected by the Library.

I searched Google books and found the title mentioned in several publications:
Congressional hearing from 1963 which refers to volume 5, issue no.3, dated March 15, 1963 published by Reports, Inc., Kent, Conn.

In-plant Thrift and Loan Services by Banks and Credit Unions (1959) by Rudolf Modley – the name on the 1957 issue–cites several articles from Report on Credit Unions.  

That is the extend of the governmental records of the Report’s  “first draft of credit union history” published during  this consequential time of credit union expansion including the era of deregulation.

The Report was cited in Congressional testimony, linked above, as part of the debate during the President’s tax message in 1963.   The reference to the Report was not about taxation but rather the necessity for supporting quality supervision of credit unions citing an Illinois example.

The Absence of Historical Records

When attempting to write a brief account of Ed Callahan’s years as Chair of NCUA I learned there was no repository for trade association publications or the numerous private newsletters that tracked the industry prior to the era of online media.

CUNA Mutual had sent their records to the Credit Union Museum.   NAFCU when it closed down in 2024 apparently had no repository of their numerous magazines and weekly newsletters to chronical their founding in 1969.  Similarly I could not locate a source for CUNA’s weekly and monthly printed publications.  State league newsletters were similarly not kept.

I contacted NCUA to see if the 21 NCUA Video Network VHS tapes created in the Callahan era had been saved.  No copies could be found of these special reports which, among other recordings, included live excerpts of the first, and only, national examiner’s conference.  There were two hour long live recordings of sessions with examiners led by Rex Johnson and a Harvard Business School professor to enhance examiner analysis and supervision skills.

Why the Past Matters Now

History may not repeat itself, but it does rhyme.   At the moment NCUA leaders are confronting the challenge of becoming more focused and efficient following policy guidance of the Trump Administration.

In 1981/2 the Agency faced a similar challenge but for very different reasons.   The credit union system was in crisis.  “Survival” was the priority according to CUNA President Jim Williams when introducing new Chair Ed Callahan at the February 1982 GAC convention.

The broad policy agenda was for credit unions and NCUA to respond to the new era of deregulation.   For NCUA this meant a complete reorganization of the agency to prioritize field examinations and supervision led by the six regional directions.   The DC head office reduced the number of staff departments from 16 to 2, an Office of Programs and an Office of Administration.  The Executive Director, Bucky Sebastian, was also the General Counsel.

The recently created DC consumer examination team which planned to employ as many as 50 personnel was in turn transferred to the RD’s. Every examiner had responsibility for completing an annual safety and soundness and compliance exam for every FCU,

The result of this reorganization placed operational responsibility on the RD’s, not central office staff. It led to a reduction in agency budgets for three consecutive years along with the lowering of FCU operating fees annually.  The agency including the CLF and NCUSIF had been designed for the open competition in which the credit union system completely outpaced their banking and S&L counterparts for the decades to come.

The Relevance for Today

Instead of trauma and closed door board discussions, these 1982  changes were done openly and with clearly stated administration and policy goals.  The messages were delivered via the video network with the first tape a credit union panel discussing the challenges of deregulation.

Public board meetings were taken “on the road” with the first held in historic Faneuil Hall In Boston MA in 1982.  Weekly press releases covered both agency initiatives and credit union progress.

But finding the contemporary public record of these events is very difficult.  When the past is lost, or worse ignored, then the present is left adrift.  When there is no understanding of how past events, there is a tendency to believe that only the present matters.

When disruptions occur whether from market or economic forces or changes of administration, the tendency is to protect the status quo, the known.  This is the result of bureaucratic incumbency.   It is only human nature for those at the top of an organization or career to protect their legacy.

The best way to understand the need and inevitability of change is to know the past.  This is particularly critical if those with ultimate responsibility are not familar with credit union, let alone NCUA, history. That familiarity can not only provide lessons but olso hope that change is necessary for an even better future.

That was the outcome of NCUA’s 1981-1985 makeover.   One would hope it would be the result  in today’s NCUA leadership deliberations.