NCUA Responding to CU Exam Issues

Exam concerns, long a priority for CUs, are moving up the agency’s priority list.

June 13, 2012

Throughout the financial crisis, credit unions in every NCUA region have raised concerns about problem examiners and examinations. Subsequently, CUNA has consistently urged NCUA to take these complaints seriously and use them to improve the process—not just for credit unions but for the agency as well. 

The most efficient examinations are ones in which credit union officials and examiners treat each other as professionals and respect each other’s informed points of views. Unfortunately, a number of credit unions say these kinds of interactions have been missing in their most recent examinations due to the more aggressive approach some examiners have adopted.

The good news is a letter to CUNA President/CEO Bill Cheney from NCUA Board Chairman Debbie Matz indicates the agency is beginning to get the message. The April 12 letter acknowledges NCUA can take steps to improve its examination program.

The letter also encourages credit union officials to attend the agency’s town hall “listening sessions,” held through July.

There, you’ll meet with NCUA representatives face-to-face and let them know “how we can help improve our examination process, how we can help credit unions feel more comfortable in using the appeals process, and how we can reduce or streamline our regulations. By carefully listening to our stakeholders…we ultimately can make better decisions about how best to modernize credit union regulations and the examination process,” NCUA says in the letter.

Time will tell, but the NCUA letter echoes comments Chairman Matz made to CUNA’s Executive Committee during the Governmental Affairs Conference regarding plans for the agency’s review of examination concerns.

Exam Help

To help credit unions when disagreements arise with examiners,  CUNA’s Examination and Supervision Subcommittee has developed and released a 64-page document, “Supervisory Issues and Examinations: Guidance for CUs During The Current Economic Times and Beyond.”

The guide is free to CUNA/league members and includes a list of examination rights to rely on in dealing with examiners. (Visit and select “more CUNA initiatives,” “exam and supervisory issues,” and “CUNA’s report on supervisory issues and examinations.”) 

The NCUA letter also addresses these credit union concerns:

► Some examiners will not provide the authority for their directives, even when requested by the credit union’s officials. Contrary to the agency’s reticence to providing such authority, which it demonstrated earlier this year during testimony before the House Financial Institutions Subcommittee, the letter agrees that examiners should provide that information.

► Credit unions fear a harsh reaction from NCUA if they dare to make an appeal. Others have said they’re unclear how the process works. The letter specifically states: “It’s important to note that credit unions may appeal an examination issue without fear. To protect credit unions from reprisals, NCUA has instituted a zero tolerance retaliation policy. Examiners may not take retaliatory action against a credit union for using any formal or informal appeals channel.…as a result of your input, we will add specific language on the exam report cover page to emphasize NCUA’s non-retaliation policy.” Matz also added the agency’s examiner training, provided all examiners with mandatory training on these important topics.

The letter commends CUNA’s Examination and Supervision Subcommittee for its contribution to the agency’s efforts to improve reporting of troubled debt restructurings. Moreover, the letter says the agency is “limiting its new rulemaking in 2012. Our rulemaking will continue to be targeted to those credit unions that take the most significant risk.” 

With the financial crisis winding down, the NCUA letter lays out some common ground to achieve improvements for credit unions, which CUNA will be pursuing as aggressively as it possibly can. 

MARY DUNN is CUNA’s senior vice president/deputy general counsel. Contact her at 202-508-6736.