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Banking chair wants CU bank exam practices audit
WASHINGTON (2/14/12)-- Senate Banking Committee Chairman Tim Johnson (D-S.D.) sent a letter to the inspectors general (IGs) of the National Credit Union Administration (NCUA), two federal banking agencies and the U.S. Treasury Department seeking an audit of the examination  practices of the federal financial institution regulators.

In the letter sent Feb. 10 Johnson wrote, "Recently, I have heard numerous concerns from community banks and credit unions that the financial regulators' examiners are conducting examinations with unclear standards or with inconsistent application of agency policies and procedures.

"Community banks and credit unions indicate that examination concerns create uncertainty in their business operations and hesitation to provide credit to their customers," the letter said, and added,  "While the regulators must ensure the safety and soundness of financial institutions, I believe responsible lending to families and small business owners is one key to our economic recovery."

"To help the (Senate Banking Committee) better understand the supervisory process of the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comprtroller of the Currency, and the (NCUA), I respectfully request that each of your offices conduct an audit of the specific agencies under your purview as appropriate," Joshnson wrote to the IGs.

Johnson's letter was sent less than two weeks after a House subcommittee hearing on The Financial Institution Examination Fairness and Reform Act (H.R. 3461). The Credit Union National Association (CUNA) testified in support of the legislation. It is opposed, as written, by the NCUA and banking agencies.

CUNA President/CEO Bill Cheney said Monday that CUNA is "encouraged by and appreciates" Johnson's letter requesting an audit of bank and credit union examination practices. 

"This is a key concern for credit unions…We are hopeful that this important forum will result in greater attention from NCUA  to credit unions' examination concerns and reasonable supervisory approaches that respect credit unions' rights when they disagree with examiner findings and directives.

"While we support the legislation, which has been introduced in the House of Representatives, the truth of the matter is that it should not take an act of Congress to address the concerns that credit unions have with the examination process. Credit unions have very reasonable expectations regarding that process:  they want more information about how decisions are made, including what regulatory or statutory authority was used to make determinations; they want consistent application of regulations; and, they want an appeals process absent the fear of retaliation.

"All of this can be done under existing law, but current practice too often falls short of these expectations," Cheney said.

He concluded, "Whether through the enactment of the House bill or more intense scrutiny as Chairman Johnson has proposed, we are pleased that Congress is taking the concerns we have raised seriously and we look forward to working with all who share our concern."


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