Mr. Chairman, thank you for moving forward so quickly with the confirmation of Deborah Matz and JoAnn Johnson to the NCUA Board. It is critical that we move as quickly as possible to get these oversight positions filled, and strong supervision of our nation's financial institutions is of particular importance.
It is a special pleasure for me to be here today to welcome nominee Matz before the Committee. I have known Debbie and her husband Marshall for many years, and I am confident that Debbie will make a superb NCUA board Member.
In fact, Mr. Chairman, I know that you know her abilities and reputation first-hand because of her service as a member of the Joint Economic Committee during your tenure as Chairman.
In continuing her long and distinguished public service career, Debbie served as Deputy Assistant Secretary of Agriculture for Administration, filling a very important role of overseeing the administration of the Department of Agriculture's day-to-day operations.
I would like to take just a moment to thank the nominees for their willingness to serve on the NCUA Board. I am confident that both of you could earn much higher salaries in the private sector, and we are grateful to you for your commitment to public service.
Mr. Chairman, credit unions and the financial services industry have changed dramatically since the founding of the NCUA in 1970. Today, over 10,000 credit unions with over $480 billion in assets serve more than 79 million people in the United States with a broad array of services -- from basic savings accounts, to credit cards, to home mortgages.
Yet at the same time, the basic mission of credit unions remains the same: to serve their members. Credit unions enjoy a tremendously loyal customer base, and most credit unions work hard to create an environment where members feel comfortable doing business.
Unfortunately, I have several commitments this afternoon that will prevent me from staying to the end of this hearing. But there is one issue that I would ask the nominees to address either during the Q&A period or in a written submission to the Committee.
Many state-chartered credit unions have expressed concern over the process by which the NCUA establishes its overhead transfer rate. As I understand it, the overhead transfer rate is the amount of money taken out of the "Share Fund" to pay for the NCUA's insurance-related activities. Historically, NCUA has estimated the transfer rate and 50 percent. Recently, however, it raised the rate to 67 percent, and then lowered it to 62 percent.
The NCUA's overall budget is funded partially by exam fees from federally-chartered credit unions and partially by the Share Fund. When the transfer rate is increased, two things happen: (1) the Share Fund provides a larger proportion of the NCUA budget; and (2) exam fees for federally-chartered institutions go down because exam fees end up representing a smaller proportion of the NCUA budget.
State chartered credit unions have expressed concern about the increase to 62 percent on both substantive and procedural grounds. I would like to hear your thoughts on the current overhead transfer rate. In addition, do you believe changes should be made to the way the NCUA Board develops the transfer rate? Should there be more transparency in the process?
Once again, Mr. Chairman, thank you for holding this hearing, and thanks to our two witnesses for their willingness to appear before us today.