Regulators Answer CU Questions at Forum

Last week’s Governmental Affairs Forum in Bend, Ore., was an eye-opening event and gave participants a look into the future of credit union regulation.

The forum’s audience was a mix of credit union executives, management staff, and volunteers who gathered to hear from state and federal regulators, including National Credit Union Administration (NCUA) Supervisory Examiner Hilary Tormala and Department of Consumer and Business Services (DCBS) Manager of Credit Union Programs Janet Powell.

“We were truly impressed with the level of insight, information, and candor both Hilary and Janet provided,” said President Troy Stang. “We cannot thank them enough for their time and dedication to the movement.”

The forum, a rare opportunity for credit union leaders to interact one-on-one with their regulators, addressed many pressing issues at the state and federal levels including due diligence, new programs, shortened exam cycles, and policy documentation. 

New Programs
During the event, Tormala noted that the NCUA will be closely scrutinizing any credit union adopting new programs. The agency is looking into ways to ensure new programs get the necessary oversight to succeed and maintain the safety and soundness of credit unions.

“I can guarantee you, these [new] programs are going to be looked at closely,” she said. She added that credit union leadership should “tread lightly” when considering new programs and should “take baby steps.”

The Association is following up with the agency for more details. 

In addition to the move to exams each calendar year for all federally-chartered credit unions, the NCUA will be implementing a yearly NCUA exam for state-chartered credit unions over $250 million in assets. As a result, the NCUA will be in affected credit unions without state regulators—while this is possible under the current regulatory scheme, the NCUA currently avoids examining state chartered credit unions without state regulators in attendance.

There were a number of concerns expressed by this requirement including the additional costs as examiners spend more time in their credit unions. The question was posed as to whether an improving economy would see a reduction in NCUA oversight; the answer was most likely not.

“I don’t know if we’ll ever go back to the 18-month exam cycle” said Tormala.

Further, when asked whether or not some of the exam process could be done increasingly offsite, thereby lowering costs, the regulators cited the valuable insights they get from being in a credit union, which may help them identify potential areas for concern.

Both regulators stressed the importance of policy documentation.  Policies must be detailed and structured, not merely PowerPoint presentations.  Important policies that have been under-documented in some credit unions include forward-looking strategic plan, management succession, programs such as third-party due diligence, and written risk assessments around information services and technology. Documentation is one of the keys to a smooth exam. 

Due Diligence
Both Powell and Tormala stressed the need for strong third-party due diligence processes for core programs and processes.   Due diligence processes for third party relationships should include risk and cost evaluations, as well as a sound exit strategy. Third parties that provide core services to the credit union need the strongest due diligence, but even those vendors who provide less vital services need appropriate due-diligence processes.


Questions? Contact Director of Regulatory Advocacy Jaycee Winn: 503.350.2209,

Posted in Events, NCUA, NWCUA.