Credit Union Exam Solutions Presents With Flying Colors

Hey everyone, this is Mark Treichel from
the Governmental Affairs Conference . I

spent yesterday over at GAC, also known
as, and had a good time catching up

with credit union folks from around
the country, some current clients,

some former clients, some trade
association folks, some ex NCUA folks

people still at NCUA, and it was great.

To see everybody face to face and have
some good conversations about what's

going on in the industry right now.

And I'm going to highlight
a couple of things.

I've got America's Credit Union's
2025 Priority policy priorities here.

I want to mention a couple of those.

One of the things that when I was at NCUA,
I always participated in and or observed,

depending on what position I was at NCUA
at the time, was the NCUA board speeches.

In this instance Kyle
Hauptman had a roundtable.

I did not attend that
roundtable but I did.

Get an opportunity to see his press
release from this morning and or

from yesterday's speech, and it
relates to Hauptman's changes to

NCOA's overdraft and NSF fee, non
sufficient fund fee collection data.

He had hinted, now that I connect
the dots to this, he had hinted that

changes were coming relative to some of
the things outlined in NCOA's priority

letter when he attended the front end of
NCOA's webinar on NCOA's priority letter.

And this is the big reveal.

It's good.

The short answer is it's good
for what he's changing is.

Good for billion dollar plus
credit unions in that they're

going to have to report less data.

So here's the press release.

It says to help ensure credit unions
can continue to support the needs of

Americans struggling with inflation,
the NCUA will no longer publish

overdraft and non sufficient fund fee
income for individual credit unions.

Chairman Kyle Hauptman announced
today, the NCUA will collect the

data during supervisory exams.

So it won't be in the call reports.

They will collect the
data as part of the exams.

There's a well intentioned movement
aimed at protecting consumers from

excessive fees, which is something
we all support, Helpman said.

However, we must also consider the
unintended consequences of such policies.

In this instance, the previous data
collection policy incentivized credit

unions to avoid serving the needs of
low income and underserved communities.

These fees can be the best option
in a bad situation, saving money and

protecting individuals credit scores.

Overdrafts also protect people
from much higher costs imposed

by their local governments.

Of course, that's the key argument for
those on the side of saying that if

you restrict fee income, you actually
hurt the people who sometimes need to

utilize services that trigger those fees.

And I, that is the camp that I am in.

I believe that this is a True statement
of what Kyle Houtman is saying, the

impact is here and while not reporting,
not having billion dollar credit unions

doesn't necessarily create a huge change,
it's a pivot from a pure missions.

Point of NC way, it's a pivot from just
taking the attraction off it a little bit.

Now, they say they're still going
to collect it during the exams.

And what they previously had said what
they're going to do in the exams is

that examiners will continue to review.

credit unit overdraft programs, including
policies, procedures, disclosures, fees,

account statements, member complaints,
internal reviews, and websites.

Now, of course, NCUA will continue to do
that, but they're going to have a smaller

footprint because they have a hiring
freeze because the Trump administration's

offered to buy people out.

I've heard some rumblings on how
many people may be expecting that, or

excuse me, that may be accepting that.

And so we have all this turmoil in
federal agencies right now meaning

that everybody's going to have a
little bit of a smaller footprint.

So they're not collecting this
data, they'll look at it during

exams, but the exams are going
to have a lesser footprint.

I think that's.

Net, a good thing, meaning that they're
probably not going to be digging into

this because they're more worried
about safety and soundness aspects.

And I will always die on that hill
that this overdraft fee income is

not a safety and soundness issue.

And that's a hat tip to previous
conversations where I disagreed with

current board member Todd Harper
back when he was chair saying that

consumer compliance is always a.

Safety and soundness risk, and
I think that's a inaccurate way

to approach consumer compliance.

All right.

The rest of the press release Chairman
Hauptman discussed this policy during

a fireside chat with Jim Nussel.

President of America's Credit Unions at
the 2025 Governmental Affairs Conference.

By the way, I did attend Jim Nussel's
opening speech, very passionate about

the difference between credit unions
and banks, very passionate about

what importance there is at this G.

A.

C.

To get out and carry the
mantra of credit unions.

And I'll get into a little
bit of that here in a minute.

So back to the press release under the
previous data collection policy, the N.

C.

U.

A.

required federally insured credit
unions with more than one billion

in assets to disclose separately
income from overdraft and N.

S.

F.

Funding fees.

This data was available to the public
on an individual basis and in aggregate.

Under the new policy, which goes
into effect with the March 31, 2025,

Call Report Cycle, the NCUA will
collect overdraft and NSF fee data

as part of the examination process.

The Agency will continue to publish
overdraft and NSF fee income data

in the aggregate once updates
to its exam system are complete.

They need to change their exam system
in order to collect this appropriately.

And that's a truck, that's a loophole.

You could drive a big truck through,
meaning that not anytime soon will

they report on it, but they will
report on it when that's been fixed.

With the attack on their budget, I don't
think they're going to be spending a

lot of money on their exam program.

Just to fix this.

So I think it'd be a big pause on
reporting it even in the aggregate

The press release goes on to say our
regulatory framework should protect

consumers from predatory Practices
without depriving them of the financial

tools they need to navigate their lives
helpman said the appropriateness of

overdrafts and NSF fee Fees charged
is a matter between the credit union

and its member owners who ultimately
determine how their credit union is run.

Amen to that?

100 percent behind that quote.

And I think it's a good change for credit
unions and it's a good pivot for NCUA.

Chairman Hauptman also discussed what
he calls true financial inclusion, which

means removing barriers to de novo credit
unions and removing the pain points that

have led to fewer smaller credit unions.

I think it's great that NCUA It
appears to be making it easier to

charter credit unions, but the reality
is that 90 percent pick a number 70

percent 80 percent 90 percent of those
new credit unions that are chartered

failed within the 1st 10 years.

That doesn't mean they
shouldn't be chartering them.

I think it's great.

If they could charter, 190
percent of those failed at a

small cost to the insurance fund,
but those other 10 succeeded.

I think good stories would come from that.

Good service would come from that.

And so I'm very supportive of that.

Although I think it's more of a noble
mission type goal that it really isn't

going to have a whole lot of legs,
despite the fact that there has been

a slight increase in new charters.

All right, the last sentence of this
press release, the NQA must ensure our

regulatory burden is not a factor in a
credit union's decision to merge away.

He said, once those credit unions
are gone, rarely does anyone come to

fill their space, fill their place.

Relieving the regulatory burden
on credit unions, especially the

small and newly formed ones posing
relatively low risk to the insurance

fund is vital to keeping those credit
unions thriving now in the future.

Again, another noble goal.

And I think they're the pivot away
from new regulations, the pivot away

from new letters to credit unions,
I think is going to be real and

there will be some relief in that.

All right.

So net, that's a good thing.

And glad to see that he took this
opportunity to announce this at GAC.

In my hands, I have a, the
talking points of America's credit

unions, 2025 policy priorities.

They break it into three
categories, protect, empower,

and advance under protect.

They talk about preserving
the credit union's tax status.

If you saw on LinkedIn.

I did about a 30 second silent video,
other than the cars going by, of the

ads outside the conference center.

A very powerful ad, the way
that they approached it.

Kudos to America's Credit Unions
for that signage outside of the, and

inside and on the handout that I have.

But it's a very powerful approach.

I think they did a real good
job of marketing on that.

By the way the next item is address
right-sized rules and junk fees.

The Biden administration created the term
junk fees and the Trump administration is

going away from that and GAC and America's
credit unions are embracing this.

It goes on to say, so legitimate,
disclosed and highly regulated fees

charged by depository institutions
are not unfairly lumped together

with fees in other industries.

And that's a great
differentiating point as well.

Stop the fraud liability shift and
focus efforts on protecting consumers

and credit unions from fraudulent
transactions initiated by bad actors.

Another noble goal.

Item to focus on.

This one caught my eye as well.

Prevent unlimited NCUA authority
by reining in the agency's

unnecessary spending and efforts
to expand supervisory powers.

So under the Trump administration, under
the Hauptman led board, I think that

this Pretty much takes care of itself
because of the spending side of things.

The Trump administration is going
to shrink the footprint of NC way,

which will reduce the spending
and the expanded supervisory

powers again, under a Republican
administration, they tend to let.

be less restrictive as it relates to
regulating credit unions and banks.

Reform the CFPB structure to establish
stability and increased oversight.

That's a code word for it's only got one
director That leads that organization

and that it should be a board in my
mind, similar to and see way or the FDIC.

But we could see that
rolled into treasury.

We could see it rolled into the
FDIC, depending on how that all goes.

That which leads to their next item under
protect, which is support an independent

regulatory regime to ensure credit
unions unique structure and commitment

to serve their members and communities is
recognized through tailored regulation.

So this lot of chatter with most people I
saw day 1 for me day 1, which is Monday.

Of GAC there's discussions and past
podcasts, recent podcasts, one with

John McKechnie talked about the risk of
Treasury taking over OCC, Treasury taking

over FDIC, Treasury taking over CFPB,
and Treasury taking over NCUA, and I like

the words America's Credit Unions use
here tailored regulations for different

type of inst of institutions is A good
thing everybody has their own niche, and

by collapsing these all into one agency
just because it might save 10 percent

on a budget, I think is unwise, so I
disagree with where the administration

might be wanting to go here.

I think it's very good.

By the way, I heard record
crowds at GAC this year.

You hear that a lot but it's good to see
that, because if more people keep showing

up, if more people hike the hill, you
will continually, get those folks over

on Capitol Hill going, wow, these folks
show up, they tell us what they want

and we don't want them voting us out.

So we better listen to credit unions.

So that's to me, the best part about GAC
and to see so many volunteers, so many

CEOs, so many young folks in entering the
credit union movement is very positive.

Part of this event.

All right.

So empower strengthening the credit
union difference by highlighting

how as not for profit financial
cooperatives owned by members.

Credit unions are consumers best
option for financial services.

Never want to lose sight of that.

And of course, 100
percent agree with that.

Establish federal data protection
standards, protect consumers and

small business financial data and
hold negligent actors accountable.

Accountable with a single
comprehensive national data

security and privacy standard.

Sounds easy.

I don't think it is.

I think it's a good idea.

Ensure a fair regulatory environment
so all financial providers operate

under the same rules and that
supervised credit unions are not

subject to regulatory disadvantages
compared to unregulated entities.

So that gets into FinTechs not being
regulated in my mind, and I think I

think there should be some consistency,
although When you talk about nuanced

wanting to have separate agencies, you're
on a slippery slope with that one when

you have that broader conversation.

Seek greater fraud prevention through
tools to protect credit union members

from fraud and hold accountable entities
that enable and or commit fraud.

Another great and noble goal here on.

I almost said QNAS on America's
Credit Unions GAC priorities.

All right, advance, build credit union
opportunities, expand access to credit

unions, great, create greater lending
options and flexibility, allow new

investment options, support innovation
and emerging technology, and support

enhanced consumer access to housing.

There's a little bit more detail
than those sound bites I just

read you there, but again, all
of those are noble and good.

Discussions on what the industry needs
to advance to enhance the wonderful

things that credit unions do for U.

S.

citizens.

The other item that I came across based on
some conversations after I came back and

I was looking at it this morning there's
some guidance out there from from OPM and

OMB relative to agency reorganizations.

And in taking a look at that
the agencies, including N.

C.

U.

A.

have until March 13th to submit a
phase 1 agency rift reduction in force

and reorganization plans due to O.

M.

B.

and O.

M.

B.

phase 2 of a plan is due April 15th,
and then they have monthly reporting

in May, June, and July on progress
reports, and then they have a target

implementation date for phase two
plans in September 30th of 2025.

So no doubt the NCOA senior executives
are busy putting together a plan

that shows that they are taking the
administration's desire to Decrease the

footprint of federal agencies seriously.

And, I've heard that NCA has had a
decent amount of people take the Trump

administration, eight month buyout plan.

It's my understanding that
just because somebody.

put a request in doesn't
mean that they will get it.

So if someone was viewed as mission
critical and said, Hey, I'd like to

get paid to work the next eight months.

And then I agree to leave at the
end of the eight months, but they

were viewed as, if this is my
terminology, mission critical, they

might not be allowed to do that.

and others who might have
positions that are more targeted.

Let's say they're trying to reduce
the footprint of exams or a particular

specialist group or someone who
has had mediocre appraisals.

I could see those folks getting
approved to be someone who

departs under that Trump buyout.

But in addition to that buyout, they're
saying you need to put together a

They're saying you, the agencies need
to put together a reorganization plan.

The OPM guidance goes on to say that
the identification of competitive

areas needs to be done by March 13th.

Competitive areas has to do with how
the RIF Will actually work in practice

and there are strategies that agents
without getting into great details,

you can make a riff area big or you
can make it small and how you do that

will determine the bumping rights that.

People will have, and just thinking
out loud and dusting off some of the

cobwebs in my brain on this, the more
competitive areas you have the harder it

is to have a exhaustive bumping rights.

And the bumping rights and riffs
are important in what they protect.

But it also means that sometimes when
you try and put a riff in place, it just

doesn't make sense to do so because the
only thing that happens is everybody

cascades down all the people stay.

That are at a higher level.

So let's say a regional director
job was to go away and they bumped

down to the lower level below
that they would keep their pay.

And then they would bump that person
who would go down and bump their pay.

So you end up having the higher people
stay and riffs tend to be generally

useless in federal government, but
they need to put a plan together.

But where it gets more interesting is
that they're being encouraged to offer.

early retirement, which is
also known as VERA, V E R A.

They're supposed to do planning
and preparation relative to VERA.

They're supposed to
conduct impact assessments.

They're supposed to review position
descriptions, et cetera, et cetera.

Then they're supposed to have a formal,
a RIF notice period, which is 30 to 60

days for people to make their decisions.

Then they're supposed to
do a RIF implementation.

And what agencies can do, they can
go to OPM and OMB to get approval

to offer VERA and to get approval to
offer what's called a VSIP, which is a

voluntary separation incentive payment,
and that allows Financial incentive,

incentives, which are typically up to
25, 000 to employees to encourage them

to retire or resign early, or if even
if they are eligible, it can be offered.

So there's no doubt all agencies are
taking a look at this, working on

getting their plans in and you get
into this game where you want to show

that you're responsive so that you
don't, have the wrath of OMB or OPM

or the White House turn your way.

But if you think about it, the
pressure points are the industry

doesn't want to be taxed.

The pressure points are NCOA
doesn't want to be merged away.

Credit unions don't want
NCOA to be merged away.

So there is a would, in my opinion, that
NCOA would be a general inclination to

say, okay, what can we do to Take action.

So as we live to fight another day,
and if you just look at, by the way,

doge dot gov has a listing of N.

C.

U.

A.

And other agencies salaries,
and they cut it based on age.

They cut it based on averages in certain
categories, but they point out that N.

C.

U.

A.

Has 1230 F.

T.

E.

S.

Full time equivalents.

If you just look at that
number, If NCUA is trying to

get down 10%, that's 123 bodies.

If they're trying to get
down 20%, that's 246 bodies.

They have 1, 230, so in order
to get down 20%, they need to

fall below 1, 000 employees.

Could that be something that they
say that's a good soundbite, where we

went from over 1, 000 to under 1, 000?

Theoretically possible.

20 percent is a pretty deep cut and
there would be ramifications of the exam.

There would be a ramification in morale.

The last NCUA board meeting
was all about staff morale.

When I look at this OPM guidance that's
out there and think about what's going on

at the agency and every agency to respond
to it It has a chilling effect on staff.

When we're talking about pivoting back
to, to Houtman saying, we'll look at this

during your exam, they're going to have
5, percent pick a number, less people

doing exams which means that they're
going to be going into less detail.

In some instances, that'll
be good for credit unions in

that they'll just have to not.

Asked so many questions.

In other instances, when you're trying
to negotiate, when NCUA is saying you

need a document resolution, you need an
examiner finding, you have an issue here.

NCUA's going to be so worried about
getting to their next exam, they

might not be negotiating as in as
good of faith as you need them to

so that you get a fair examination.

All right.

I'm losing my voice because I had
a lot of conversations yesterday.

I'm about to head over for
my day two, which is Tuesday.

If you're there and you want
to chat, let me know if you

are there and want to say hi.

Come on up to me and let's chat
about what's going on at GAC, what's

going on at your credit union.

I really enjoyed seeing
the folks I saw yesterday.

Looking forward to seeing some folks
today and meeting some new folks as well.

All right.

That's it.

Mark Treichel signing
off with flying colors.