NCUA: Small Credit Unions to See Reduced Exam Hours

Small credit unions can expect to see their exam hours reduced as the National Credit Union Administration (NCUA) shifts resources to focus on the nation’s largest credit unions—those with larger risks and potentially wider consequences—once the new Office of National Examinations and Supervision (ONES) is operational, according to the NCUA.

During a call Tuesday morning, NCUA Public Affairs Specialist John Fairbanks confirmed the fewer-small-credit-union-examiners speculation and also said that the NCUA is reaching out to those credit unions with more than $10 billion in assets—those that will primarily be impacted when the new regulatory office opens its doors on Jan. 1, 2013. Sources at BECU, the only Northwest-based credit union large enough to be affected by the agency’s shifting resources, could not confirm that a meeting had been scheduled.

The new agency will also supervise corporate credit unions.

The move to devote greater resources to the oversight of larger credit unions effectively broadens the definition of “small credit union,” a position supported by both the Northwest Credit Union Association (NWCUA) and the Credit Union National Association (CUNA). However, the shift is not without controversy, as some credit union leaders have expressed concern about the agency placing undue supervisory attention on large, well-managed credit unions.

Indicating that the new office and its directives may have been “in the works” for up to two years, NWCUA CEO John Annaloro echoed the concern regarding undue regulatory burden for both large and small credit unions but also offered support to the agency.

“The NWCUA supports any effort by the NCUA to direct the most academically astute examiners to the nation’s most sophisticated institutions,” Annaloro said. “In some ways ‘ONES’ resembles the FDIC office focused on systemically important financial institutions, however, it must be noted that no credit union, regardless of size, presents a systemic risk to the financial system of the United States. ‘Systemic risk’ is a special term that should not be misapplied to large credit unions.”

NCUA Chairman Debbie Matz announced the creation of ONES during the NAFCU Annual Conference last Thursday, where she said a “one-size-fits-all approach” to regulation was no longer appropriate in the credit union industry. She said that the agency will reallocate existing resources to focus on the largest credit unions and protect the share insurance fund from losses.

Current Director of Corporate Credit Unions Scott Hunt will lead the new office and will bring his existing staff with him. The Office of Examination and Insurance, led by Director Larry Fazio, will provide twice-annual “quality control” reviews of the new office’s examinations.


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Posted in NCUA, NWCUA.