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114th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      114-868

======================================================================



 
      NATIONAL CREDIT UNION ADMINISTRATION BUDGET TRANSPARENCY ACT

                                _______
                                

 December 12, 2016.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 2287]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 2287) to require the National Credit Union 
Administration to hold public hearings and receive comments 
from the public on its budget, and for other purposes, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                          Purpose and Summary

    H.R. 2287 amends Section 209(b) of the Federal Credit Union 
Act (12 U.S.C. 1789) to require the National Credit Union 
Administration Board, before the annual submission of its 
detailed budget, to:
          (1) print a draft of the budget in the Federal 
        Register;
          (2) hold a public hearing to receive comments from 
        the public on the draft; and
          (3) detail how the budget will address comments 
        submitted by the public.

                  Background and Need for Legislation

    The NCUA operates independent of the congressional 
appropriations process. The NCUA annual operating budget that 
funds credit union examination and supervisory activity is in 
turn funded through direct and indirect assessments on the 
federally-insured state and federal credit unions it oversees.
    The Federal Credit Union Act (FCUA) provides that NCUA 
expenses incurred in the course of examination and supervision 
of federal credit unions may be covered by operating fees 
assessed on those same federal credit unions. Currently, 
federally insured credit unions provide a significant majority 
of the funding for the operations of the NCUA through those 
operating fees. Each Federal credit union is required to pay 
this fee based on its prior year asset balances and rates set 
by the NCUA Board.
    Between 2001 and 2008, under then-NCUA Chairman Dennis 
Dollar, the NCUA held annual public hearings on its budget. In 
2008, former Chairwoman Deborah Matz ceased the practice of 
holding public budget hearings.
    In a letter of support for H.R. 2287 dated May 13, 2015, 
the Credit Union National Organization wrote:

          The ``National Credit Union Administration Budget 
        Transparency Act'' would direct the NCUA to establish a 
        process by which the public, including members of the 
        credit union community, may examine and comment on the 
        agency's proposed annual budget prior to adoption. 
        Additionally, this legislation would ensure that 
        members of the NCUA Board, who must vote to adopt the 
        annual budget, have adequate opportunity to review 
        specific expenditures and overall methodology in order 
        to make an informed decision as to whether the budget 
        as proposed accurately reflects the needs of the 
        agency. This process would increase transparency and 
        accountability at the agency, and engender public 
        trust, thereby strengthening and supporting the 
        agency's mission.
          Credit union member resources are used to fund nearly 
        all of NCUA's budget. It is not too much to ask for the 
        members of the NCUA Board to conduct a hearing and 
        listen to stakeholder feedback from those responsible 
        for funding the activities of the agency. We disagree 
        with those who would suggest that a hearing on the 
        agency's budget would result in ``regulatory capture''. 
        As a former Chairman of the House Budget Committee, I 
        am well aware that Congress regularly holds hearings on 
        the Federal budget and the activities of the various 
        federal agencies to solicit stakeholder input and also 
        to exercise its oversight responsibilities. This type 
        of back and forth is an important part of our 
        democratic process and your legislation, which would 
        require NCUA to hold a hearing on its budget, is fully 
        consistent with these principals.

                                Hearings

    The Committee on Financial Services' Subcommittee on 
Financial Institutions held hearings examining matters relating 
to H.R. 2287 on July 23, 2015 and October 21, 2015.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
December 8, 2015 and December 9, 2015 and considered the bill. 
An amendment offered by Mr. Royce was withdrawn. The Committee 
ordered H.R. 2287 to be reported favorably to the House without 
amendment by a recorded vote of 40 yeas to 16 nays (recorded 
vote no. FC-78), a quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole record vote in Committee was a motion by Chairman 
Hensarling to report the bill favorably to the House without 
amendment. The motion was agreed to by a recorded vote of 40 
yeas to 16 nays (recorded vote no. FC-78), a quorum being 
present.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 2287 
will increase transparency and accountability at the NCUA by 
amending the current law to ensure that the public is provided 
an opportunity to weigh in as the NCUA considers its annual 
budget.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, January 29, 2016.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2287, the National 
Credit Union Administration Budget Transparency Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sarah Puro.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 2287--National Credit Union Administration Budget Transparency Act

    H.R. 2287 would require the National Credit Union 
Administration (NCUA) to make changes to its budget process. 
Because enacting H.R. 2287 would affect direct spending, pay-
as-you-go procedures apply; however, CBO estimates that the net 
effect on direct spending would be negligible. Enacting the 
bill would not affect revenues.
    H.R. 2287 would require the NCUA to print a draft of its 
proposed budget in the Federal Register, to hold public 
hearings on the proposed budget, and to address the comments 
submitted by the public before the budget becomes final. Based 
on information from the NCUA, CBO estimates that the agency 
would need several additional staff members to complete the 
required work and to respond to public comments. However, CBO 
estimates that the net effects on the federal budget would be 
negligible because any increase in operating costs for NCUA 
would be offset by additional fees collected from federal 
credit unions.
    CBO estimates that enacting H.R. 2287 would not increase 
net direct spending or on-budget deficits by more than $5 
billion in any of the four consecutive 10-year period beginning 
in 2027.
    H.R. 2287 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments.
    If the NCUA increases fees to offset the costs of 
implementing the bill, H.R. 2287 would increase the cost of an 
existing mandate on private entities required to pay those 
fees. Based on information from the NCUA, CBO estimates that 
the aggregate cost of the mandate would be small and fall well 
below the annual threshold for private-sector mandates 
established in UMRA ($154 million in 2016, adjust annually for 
inflation).
    The CBO staff contacts for this estimate are Sarah Puro 
(for federal costs) and Logan Smith (for private-sector 
mandates). The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 2287 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                    Duplication of Federal Programs

    Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015), 
the Committee states that no provision of H.R. 2287 establishes 
or reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, 114th Cong. (2015), 
the Committee states that H.R. 2287 contains no directed 
rulemaking.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This Section cites H.R. 2287 as the ``National Credit Union 
Administration Budget Transparency Act.''

Section 2. Budget transparency for the NCUA

    This section amends Section 209(b) of the Federal Credit 
Union Act to require that, prior to the submission of its 
budget, the NCUA make its budget publicly available on the 
Federal Register, hold a public hearing for comments on the 
draft of the budget and detail how the budget will address 
comments submitted by the public.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                        FEDERAL CREDIT UNION ACT




           *       *       *       *       *       *       *
TITLE II--SHARE INSURANCE

           *       *       *       *       *       *       *



                       administrative provisions

  Sec. 209. (a) In carrying out the purposes of this title, the 
Board may--
          (1) make contracts;
          (2) sue and be sued, complain and defend, in any 
        court of law or equity, State or Federal. All suits of 
        a civil nature at common law or in equity to which the 
        Board shall be a party shall be deemed to arise under 
        the laws of the United States, and the United States 
        district courts shall have original jurisdiction 
        thereof, without regard to the amount in controversy. 
        The Board may, without bond or security, remove any 
        such action, suit, or proceeding from a State court to 
        the United States district court for the district or 
        division embracing the place where the same is pending 
        by following any procedure for removal now or hereafter 
        in effect, except that any such suit to which the Board 
        is a party in its capacity as liquidating agent of a 
        State-chartered credit union and which involves only 
        the rights or obligations of members, creditors, and 
        such State credit union under State law shall not be 
        deemed to arise under the laws of the United States. No 
        attachment or execution shall be issued against the 
        Board or its property before final judgment in any 
        suit, action, or proceeding in any State, county, 
        municipal, or United States court. The Board shall 
        designate an agent upon whom service of process may be 
        made in any State, territory, or jurisdiction in which 
        any insured credit union is located;
          (3) pursue to final disposition by way of compromise 
        or otherwise claims both for and against the United 
        States (other than tort claims, claims involving 
        administrative expenses, and claims in excess of $5,000 
        arising out of contracts for construction, repairs, and 
        the purchase of supplies and materials) which are not 
        in litigation and have not been referred to the 
        Department of Justice;
          (4) to appoint such officers and employees as are not 
        otherwise provided for in this Act, to define their 
        duties, fix their compensation, require bonds of them 
        and fix the penalty thereof, and to dismiss at pleasure 
        such officers or employees. Nothing in this or any 
        other Act shall be construed to prevent the appointment 
        and compensation as an officer or employee of the 
        Administration of any officer or employee of the United 
        States in any board, commission, independent 
        establishment, or executive department thereof;
          (5) employ experts and consultants or organizations 
        thereof, as authorized by section 15 of the 
        Administrative Expenses Act of 1946 (5 U.S.C. 55a);
          (6) prescribe the manner in which its general 
        business may be conducted and the privileges granted to 
        them by law may be exercised and enjoyed;
          (7) exercise all powers specifically granted by the 
        provisions of this title and such incidental powers as 
        shall be necessary to carry out the powers so granted;
          (8) make examinations of and require information and 
        reports from insured credit unions, as provided in this 
        title;
          (9) act as liquidating agent;
          (10) delegate to any officer or employee of the 
        Administration such of its functions as it deems 
        appropriate; and
          (11) prescribe such rules and regulations as it may 
        deem necessary or appropriate to carry out the 
        provisions of this title.
  (b) With respect to the financial operations arising by 
reason of this title, the Board shall--
          (1) on an annual basis and prior to the submission of 
        the detailed business-type budget required under 
        paragraph (2)--
                  (A) make publicly available and cause to be 
                printed in the Federal Register a draft of such 
                detailed business-type budget; and
                  (B) hold a public hearing, with public notice 
                provided of such hearing, wherein the public 
                can submit comments on the draft of such 
                detailed business-type budget;
          [(1)] (2) prepare annually and submit a detailed 
        business-type budget as provided for wholly owned 
        Government corporations by the Government Corporation 
        Control Act, and where such budget shall address any 
        comments submitted by the public pursuant to paragraph 
        (1)(B); and
          [(2)] (3) maintain an integral set of accounts, which 
        shall be audited annually by the General Accounting 
        Office in accordance with principles and procedures 
        applicable to commercial corporate transactions, as 
        provided by section 105 of the Government Corporation 
        Control Act.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    H.R. 2287 would require that the National Credit Union 
Administration (``NCUA'' or ``Administration'') conduct public 
hearings and receive public notice and comment on its draft 
budget. This proposal would seek to allow credit unions the 
ability to influence the NCUA's budget, thereby undermining the 
financial independence afforded to the NCUA and every other 
federal prudential regulator. H.R. 2287's requirements are 
without precedent as no other federal regulator is subject to 
annual, pre-decisional hearings or a public notice and comment 
process on its draft budget, and no federal regulator provides 
such hearings on a voluntary basis.
    Federal prudential regulators like the NCUA, the Federal 
Deposit Insurance Corporation, and the Office of the 
Comptroller of the Currency are all independent of the 
appropriations process because the budgets of the agencies 
charged with the safety and soundness of our financial 
institutions should be shaped by the agency's mission and its 
obligations under federal law--not from pressure from the 
entities they regulate. H.R. 2287 seeks a result similar to 
subjecting financial regulators to the appropriations process, 
albeit indirectly, through public hearings and a notice and 
comment period on the NCUA's pre-decisional annual budgets.
    In the past, from the years 2001 to 2008, the NCUA 
conducted pre-decisional budget hearings, which H.R. 2287 seeks 
to reinstate. Unsurprisingly, the hearings were largely 
attended by the credit union industry where they were 
successful in pressuring the NCUA to reduce its budget. These 
hearings led to substantial reductions in the NCUA's budget 
such that the NCUA's staff in 2009 was smaller than it was in 
2000. Consequently, when the Great Recession hit the nation's 
credit unions, the NCUA was unprepared to respond. The NCUA 
rightly discontinued the budget hearings, and H.R. 2287 is 
seeking to re-establish them despite clear evidence of the harm 
that this practice caused during the period leading up to the 
financial crisis.
    The goal of this legislation is not transparency, but 
instead about regaining the influence that the industry once 
had over the NCUA's budget from 2001 to 2009. The NCUA is 
already a peer leader amongst financial regulators in the 
information it already provides to the public on its budget, 
providing line-item budgets for each of the funds it 
administers; a dedicated webpage that provides detailed 
information on its budget including board memoranda on the 
budget and budget briefing summaries; answers to industry-
submitted questions about the budget; and, additional line-item 
budgets separated by each NCUA office on expenditures like 
employee compensation, travel, and procurement as well as a 
host of other budget-related topics.
    Budget decisions by financial regulators should be shaped 
by safety and soundness concerns and not by the industries they 
regulate. Credit unions continue to grow in size and 
complexity, and as credit unions seek to expand their capacity 
to use derivatives and engage in more small business lending, 
the NCUA should have the resources they need to keep pace with 
the credit union industry. If the past is prologue, H.R. 2287 
would give the credit union industry a venue for pressuring the 
NCUA to cut its budget just as credit unions are growing and 
becoming more complex--a combination that exposes credit union 
members and the Share Insurance Fund that insures all credit 
union deposits to unnecessary risks.
    For the foregoing reasons, the Minority opposes H.R. 2287.

                                   Maxine Waters.
                                   Wm. Lacy Clay.
                                   Ruben Hinojosa.
                                   Keith Ellison.
                                   Al Green.

                                  [all]