On November 5, 2025, I had the opportunity to testify before the NCUA Board about the agency’s proposed budget for 2026–2027.

I spoke on behalf of the Defense Credit Union Council (DCUC), but the issues we discussed affect the entire credit union community. First and foremost, I want to commend the NCUA for making an effort to streamline its budget and for being open and transparent throughout the process. The agency has put forward a leaner budget for the next two years – one that will save the credit unions who fund NCUA’s operations some money. It’s not every day that a regulator invites stakeholders to weigh in on its budget, and NCUA deserves credit for that kind of transparency and collaboration. But as I told the Board, streamlining a budget isn’t just about cutting costs across the board – it’s about making smart choices. We need to decide where to trim and where to invest so that every dollar goes to the right place.

One of the first points I raised in my testimony was the simple fact that there are fewer credit unions today than there were a year ago. As of June 30, 2025, the NCUA oversaw 163 fewer federally insured credit unions than at the same time the year before. Fewer credit unions should mean less supervisory work – and that should translate into lower supervisory expenses. In other words, a shrink in the number of institutions ought to bring a proportional shrink in the budget for overseeing them. This change alone saves time and money for the agency, and I urged that it be clearly reflected in NCUA’s budget. There’s no reason for credit unions to pay for oversight infrastructure that isn’t needed; if the exam workload is lighter, the costs should come down accordingly.

Another way the NCUA can save resources (while still keeping our system safe) is by rethinking how frequently it examines well-run credit unions. I encouraged the NCUA to extend the exam cycle for our strongest credit unions, specifically those with CAMELS ratings of 1 or 2 (the lowest risk ratings). These are the credit unions that have demonstrated solid performance and sound risk management. Examining them less often – say on a longer cycle – would free up NCUA examiners to focus on higher-risk credit unions that truly need more attention, all while still protecting the Share Insurance Fund. In practical terms, if a credit union is healthy and well-managed, do we need to have examiners in its offices as frequently? Probably not. By lengthening the time between exams for these top performers, NCUA can allocate its oversight resources more efficiently without compromising safety and soundness.

The good news is that recent investments in technology should make these longer exam cycles possible. NCUA has been modernizing its examination tools – notably the Modern Examination and Risk Identification Tool (MERIT) – to improve remote supervision capabilities. In fact, the agency invested $1.7 million this year to update MERIT, and it plans to spend another $2.9 million in 2026 on further technology upgrades. My point to the Board was: let’s capitalize on those investments. With better tech and data analytics, examiners can monitor many aspects of a credit union’s health off-site, reducing the need for frequent in-person exams. In other words, NCUA’s own upgrades should empower it to safely give well-capitalized, well-managed credit unions a bit more breathing room. We have the tools to maintain effective supervision and cut down on unnecessary exam frequency – it’s a win-win for the regulator and the regulated.

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I also highlighted travel and training expenses as areas ripe for further trimming. The proposed budget already reduces costs in many categories, partly because NCUA plans to downsize staff by about 23% and cut back on contractors by 24%. However, the travel budget isn’t dropping nearly as much – only about a 13% reduction in employee travel costs. From my perspective, if you’re reducing staff and leaning more on technology, you should be able to cut travel spending more aggressively as well. We’ve all seen over the past few years that remote work and virtual meetings can be highly effective, and NCUA’s examination program is no exception. In fact, with digital examination tools like MERIT (boosted by that additional $2.9 million investment) in hand, more supervisory interactions can be handled virtually rather than through on-site visits.

Training is another related area. NCUA allocates about $1.1 million for state examiner travel to attend NCUA-sponsored training classes. I suggested that at least half of that could be saved by doing more training online. Virtual training has continually proven effective for examiners and staff development, and it’s a lot cheaper than flying people around. So why not take fuller advantage of that? My message was that NCUA should reexamine its travel and training budgets with a critical eye – there are likely more savings to be found there. Every dollar saved on airfare or hotels is a dollar that can be left in credit unions’ coffers or redirected to higher priorities.

While I’m in favor of smart cuts, I also cautioned against cuts that go too deep in the wrong places. A major concern I shared involves the Office of External Affairs and Communications (OEAC). The proposed budget would slash OEAC’s funding by an astounding 82%, shrinking its staff from 16 positions down to just 3. That is a drastic reduction. Now, I understand that part of this might be due to some functions being moved around in a reorganization, but even so, an 82% cut is huge and sends a troubling message. This is the office that handles the NCUA’s communications and stakeholder outreach. In my view, this is the wrong time to effectively gut the agency’s communications arm. The NCUA is going through a lot of changes, and more than ever the industry needs clear, open lines of communication with our regulator – and NCUA needs the ability to communicate its goals and updates to credit unions, Congress, and other stakeholders. Diminishing the agency’s capacity to engage with us could lead to confusion or disconnect at a time when clarity is paramount.

It’s also worth noting that OEAC has a unique role in NCUA’s structure. Unlike many other offices, OEAC reports directly to the NCUA Chairman, not through the normal chain of command. That direct line to the top means OEAC is key to helping the Chair set the tone and messaging for the whole agency. If you whittle OEAC down to three people, you risk hampering the Chair’s ability to effectively reach out and shape the narrative of what NCUA is doing. I urged the Board to rethink this cut – to preserve and prioritize OEAC’s capacity even as they look for efficiencies elsewhere. Communication isn’t a luxury or a bureaucratic extra; it’s a core function, especially during transitions and reforms. We need NCUA to keep that communication channel strong.

Similarly, I voiced concern about cuts to the Office of Credit Union Resources and Expansion (CURE). This office might not be as high-profile as others, but it’s incredibly important. CURE is the team that helps charter new credit unions, supports field of membership expansions, and provides assistance to low-income and minority credit unions. In short, it’s about expanding access and supporting the little guys. The budget proposal would cut CURE’s budget by 30% and reduce its staff by 22%. That kind of reduction could really slow down the support and resources that flow to the credit unions that need them most. For example, CURE administers things like the Community Development Revolving Loan Fund and training for small credit unions – if their staffing is down by nearly a quarter, how much longer will a new charter application take? Will mentorship and training programs be scaled back? Those are real concerns. I urged NCUA to prioritize CURE’s capacity and not lose sight of its mission even as the agency tightens its belt. Cutting on-paper expenses means little if it ends up hurting communities and new entrants who rely on CURE’s services. We have to be mindful that efficiency shouldn’t come at the cost of inclusion and growth in our movement.

After flagging these areas of concern (OEAC and CURE), I offered the Board a recommendation on how to balance the scales. Essentially, I suggested that if NCUA needs to find savings, it could look more closely at the Office of Consumer Financial Protection (OCFP) as a place to trim further. Under the current proposal, OCFP’s budget would decrease by only 28% – significantly less of a cut than what OEAC and CURE are facing. Now, OCFP is the unit that handles consumer protection compliance and oversight. I’m not saying consumer protection isn’t important – it absolutely is. But we have to consider where those resources are most effectively used. The Consumer Financial Protection Bureau (CFPB) in Washington has itself pulled back on examinations of larger institutions and certain nonbanks lately, largely due to its own staffing and budget reductions. In other words, other regulators are recalibrating their consumer compliance efforts in light of resource constraints, focusing on the biggest risks. I argued that NCUA should do the same. Regulatory parity suggests that our oversight should align with actual risk in the system.

What might that look like? It means making sure OCFP focuses its attention on higher-risk institutions and issues, rather than spreading thin across all credit unions regardless of risk. It means directing some resources toward financial education and guidance for consumers (which can often be done at lower cost), instead of heavy-handed exams at well-behaved smaller credit unions. And it means ensuring that for the vast majority of credit unions – those under $10 billion in assets – consumer compliance supervision is proportional to their size and complexity. In my testimony, we recommended that NCUA trim the OCFP budget a bit more and use that margin to offset the funding needed to keep critical offices like OEAC and CURE robust. By doing so, the agency can still uphold strong consumer protection where it’s most needed, while also maintaining its support and communication functions. It’s about striking the right balance: protecting consumers, yes, but also not undercutting the institutions that serve those consumers.

In closing, I want to reiterate that I appreciate the NCUA’s willingness to listen and its commitment to running a lean, effective operation. They have demonstrated a genuine focus on efficiency, transparency, and staying true to their mission, and that’s something we in the credit union world value greatly. My suggestions to the Board weren’t criticisms of the overall direction – in fact, I support the move toward a more streamlined budget. Rather, they were about refining that approach to make sure we cut in the right places and keep investing where it counts. We all share the same end goal: a safe, sound, and thriving credit union system that continues to serve our members and communities.

I’d like to thank all my fellow credit union professionals for your ongoing support and advocacy. These budget discussions might seem technical, but they have real impacts on how we serve our members. I encourage all of you to stay engaged and keep voicing your perspectives. Please feel free to reach out with any questions or feedback – your insights are incredibly valuable, and I’m always eager to hear from the community. Together, by maintaining open dialogue, we can ensure our regulator’s budget priorities stay aligned with the best interests of the credit union movement. Let’s keep working together to make sure every NCUA budget dollar counts for the people we serve.