Does NCUA’s Restructuring Plan Make Cents\Sense?

July 24, 2017 at 9:07 am 1 comment

NCUA announced Friday that it plans to shut down Region 1 as part of a restructuring of its operations.  Region 3, based in Atlanta,  is also marked for death. Region 1 overseas the following states:  federally insured credit unions in Connecticut, Maine, Massachusetts, Michigan, New Hampshire, New York, Rhode Island, Vermont, and Wisconsin.

In a press release NCUA explained that it plans to:

  • Consolidate the agency’s five regional offices into three by closing the Albany, New York, and Atlanta, Georgia offices and eliminate four of the agency’s five leased facilities;
  • Create an Office of Credit Union Resources and Expansion by redefining and realigning chartering and field-of-membership, credit union development, grants and loans, and minority depository institutions programs;
  • Restructure the Office of Examination and Insurance into specialized working groups; and
  • Realign the Asset Management and Assistance Center to include changes to the servicing business model and moving to a financial supervisory structure.

In concept it’s hard to argue against a reorganization. I just looked up the numbers and since 2003, when NCUA last  did this, there were 9,574 credit unions today there are 5,857. There were 687 NY  CUS in 2003 and only 362 today.  At the same time, aggregate  industry assets have increased.  That means that regulators should be focusing on a smaller number of larger institutions irrespective of where they are located.

That being said, this is a process that will  have to be monitored closely. First, there is the symbolic value: New York is the center of finance in this country and regulators should be embedded into its ebb- and- flow. Second, even in the age of the internet physical   proximity matters.

Finally, consolidations don’t always result in big savings, especially when Government is involved.  After all, no matter how many regional offices NCUA closes it still has to send out examiners.  And in any bureaucracy the time it can take to carry out a restructuring can further dull its fiscal benefits. NCUA staff will be reduced through attrition.

The bottom-line is that  the industry has to make sure that the benefits really do outweigh the costs not just in terms of finances but in terms of ensuring that credit unions are subject to appropriate and efficient oversight.


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Industry Talks the Talk and Walks the Walk Its Time To Prepare For NY’s Paid Family Leave

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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