Regulator Meets Regulated at NCUA Listening Session in Denver

Credit unions from throughout the western United States gathered in Denver on Tuesday for the final chapter in a series of “Listening Sessions” led by National Credit Union Administration (NCUA) Chairman Debbie Matz.

“I believe it is important for us to get out and have an open dialogue with our credit unions in order to build a better understanding of the issues that confront us all,” Matz said.

Northwest Credit Union Association (NWCUA) President Troy Stang attended Tuesday’s session and came away impressed with the level of discussion with the nation’s top regulator.

“I think Chairman Matz did an excellent job of listening to the concerns of our credit unions,” Stang said, “especially in the arena of rule-making by the agency.”

One proposed rule that has stirred considerable controversy deals with increased scrutiny by the NCUA of credit union service organizations (CUSOs). Matz said that without some level of regulation, liabilities incurred from a CUSO could severely damage the safety and soundness of the credit union itself.

“CUSOs are potentially a major risk to the credit union industry, but currently our hands are tied,” Matz explained. She then acknowledged that the rollout of a proposed rule created a storm of complaints by credit unions citing unintended consequences of the proposal. Matz used the example to illustrate how the NCUA is listening to industry concerns and noted the agency pulled back the proposed rule for further examination.

“Staff is still working on it,” she said. “We want to make sure we get it right. I am not sure when we will move it forward.”

Matz detailed some of the changes in the agency to address the changing credit union environment. Among the initiatives cited was the reallocation of examiner resources to the larger credit unions.

“That’s where the risk to the share insurance fund is,” she said. “We need to put exam hours where the risk is.”

Considerable time was allocated to discussions regarding NCUA exams and what many attendees said was a “lack of consistency” in the examination process. Executive staff from the NCUA also took part in the meeting and acknowledged that more than 30 percent of the examiners have less than five years experience with the NCUA, and that has fueled some of the concern.

A number of credit union leaders asked the NCUA to work with its examiners on providing clearer, more transparent explanations when an examination results in a downgrade of the credit union’s CAMEL rating.

“I need to explain to my board why our rating has moved from a ‘1’ to a ‘2,’ and what are the specific actions required to get us back to a ‘1,’” one attendee said. She and others noted that while lines are not always clear in the evaluation process, it is important to be more “black and white” rather than subjective when it comes to a CAMEL rating.

Matz and the NCUA staff left the attendees with the following tips to minimize the stress of the examination process:

  1. Keep your cool. It is okay to ask for a break or for time to research something and get back to the examiner if you need to cool down.
  2. Put your cards on the table. Examiners will view managers that have proactively identified their own problems and implemented solutions more positively.
  3. Don’t take it personally—it is their job. Be organized and ready with your documentation and make this as easy for examiners to verify as possible. Make sure you have good controls.


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Posted in Advocacy News, NCUA.