ALEXANDRIA, Va.-Even though nearly all the issues addressed at the July NCUA Board meeting were very significant to the credit union industry, the meeting ran as smoothly as any of the others this year. During the meeting, the NCUA Board members approved unanimously every single item that came before them, including incidental powers, the Credit Union Service Organization (CUSO) regulation, a more flexible examination schedule with a proposal for quarterly call reports, and a budget reduction for 2001. "The NCUA Board has passed a milestone. It's clearly evident from the decisions made today by the board that it has adopted a new attitude," CUNA President and CEO Dan Mica said. "In approving credit union flexibility to offer additional services under incidental powers, and in re-tooling its budget, this board exhibits a disposition of concern for credit unions' future, and an understanding of its own accountability for the funds credit unions pay for agency operations." NAFCU President and CEO Fred Becker noted that the board's actions take NAFCU one step closer to their goal of enhancing the federal charter, particularly the incidental powers final rule. "NAFCU has been focusing a great deal of time and effort on enhancing the federal charter, and we believe expanding federal credit unions' incidental powers authority is a critical and commendable step toward achieving that goal," Becker said. "NAFCU commends the board and staff at NCUA for their exceptional work in crafting a flexible and responsive rule." While many items on the NCUA Board agenda for this month were highly anticipated-NCUA Board Member Geoff Bacino called it a "watershed event"-the incidental powers rule was possibly the one the credit union community discussed the most. "It is very beneficial to credit unions because all the previous policies will be in one place," NAFCU Director of Regulatory Affairs Gwen Baker commented. "NCUA has done a solid, professional job addressing the legal issues," CUNA Associate General Counsel Mary Dunn followed up. She remarked that from the language of the rule, it seemed NCUA was shoring themselves up for another battle with the bankers over credit union authorities and has done an excellent job of it. Baker noted the language was added to the preamble to justify the agency's reasoning in creating the regulation, which codified activities NCUA was already engaged in and policies previously formulated through staff legal opinion letters. "Just because a person is of modest means, I do not believe they are entitled to only modest services," said NCUA Acting Chairman Dennis Dollar explaining the board's action. In providing federal credit unions greater guidance on their incidental powers and permitting them to receive income from their offerings, the board also granted broader powers to CUSOs. Rather than a laundry list of activities CUSOs are allowed to engage in, the new regulation provides broad categories of activities and is meant to be illustrative and not exhaustive. NCUA, in the regulation, also encouraged CUSOs to seek out an advisory opinion on new activities, rather than requiring them. Additionally, a federally-chartered corporation was added to the permissible structures of a CUSO. In line with NCUA's recent risk-based approach to regulation, the board approved a risk-based examination schedule policy, which is not necessary to send out for comment. The new examination schedule directs examiners to judge if a credit union is stable enough to be examined every 18-months rather than every 12-months. The action was taken to free up agency resources for credit unions that truly needed the extra help. NCUA Director of Examination and Insurance Dave Marquis emphasized that the change was very important because of the changing credit union profile and would increase agency efficiency. He noted that at one time credit unions had a goal of 6% capital and now the average is 11.4% with credit union assets growing 12% a year. He added that NCUA hoped to introduce a new risk-based examination by the end of the year. "Although, to credit unions, we may seem to be a monolith.we are, in reality, a small agency with limited resources," Dollar explained. In conjunction with the more flexible examination schedule, the NCUA Board also issued for approval a proposal for quarterly call reports so the agency could better monitor credit unions off-site, since examiners would not be on-site at many credit unions as often. Currently, only credit unions with more than $50 million in assets have to file quarterly reports. Dunn said CUNA was inclined to support this change in exchange for the expanded examination schedule because CUNA had not "gotten the indication that it would be a severe problem for smaller credit unions." NAFCU's Baker said she could not comment until the trade association heard back from its members. NAFCU Communications Manager John Zimmerman pointed out that 45% of NAFCU members only file semi-annually at present. In addition to the time and money saving flexible examination schedule, NCUA was able to reduce its budget for 2001 by $2,161,000 or 1.54%. The new budget total tallies out to $138,407,580. Last year, NCUA cut its budget by 1.4% at the mid-session budget review and, in 1999, the budget was reduced 3.7%. "NAFCU has long advocated greater operating efficiencies at the agency, and we hope that today's reductions are a sign of even greater savings to come in the next budget cycle," Becker said. Other issues the board unanimously approved included a community charter conversion from Western Sun Federal Credit Union in Tulsa, Okla., serving the 563,299 residents of Tulsa County; a proposal for reimbursement of credit union board members for a travel companion other than a spouse; a final rule updating vital records preservation; and a final rule regarding NCUA's ability as to disaffirm or repudiate certain contracts of a liquidated credit union, except when the credit union has obtained credit from a Federal Home Loan Bank. [email protected]