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Exam issues remain high priority CUs to NCUA
SAN DIEGO, Calif. (7/13/12)--Examination issues again loomed large as the National Credit Union Administration (NCUA) this week held its fifth credit union listening session in San Diego, Calif.

NCUA Chairman Debbie Matz was joined at the session by NCUA Executive Director Dave Marquis, Director of Examination and Insurance Larry Fazio, Region II Director Jane Walters, General Counsel Mike McKenna, and Office of Small Credit Union Initiatives Director Bill Myers. Regional supervisory examiners also answered questions from the audience.

Attendees made suggestions on how the examination process could be improved, and the NCUA officials said they were aware of the burden that regulations and examinations can create for credit unions.

Some credit union representatives criticized NCUA examiners' overuse of Documents of Resolution (DOR). Matz said due to the improving condition of the credit union system, examiners are now being instructed to restrict the use of DORs to only material examination findings. She said the agency expects the number of DORs filed with credit unions to decline in the future.

The agency staff also recognized that receiving two separate lists of regulatory requests, from NCUA and state examiners, can create issues for credit unions. Matz and the NCUA representatives said they would work to encourage increased coordination between state and federal examination teams. The federal regulator also clarified that the California Department of Financial Institutions' "examiner in charge" would serve as the lead examiner for joint examinations held in that state.

Credit unions that have demonstrated net-worth ratios of 6% or higher for four consecutive quarters should be removed from the restrictions imposed under the Net Worth Restoration Plan (NWRP), the NCUA said. Listening session attendees said they were concerned by NCUA rules that prevent credit unions under NWRPs from providing loans to members who are above a specified debt-to-income ratio. The agency officials said they would take this and other NWRP issues under consideration.

The importance of communication between examiners and credit union staff was one of many issues that the NCUA again addressed at this listening session.

Credit union representatives also asked the agency to work toward a quicker, more consistent, and less redundant member business lending (MBL) waiver process. NCUA staff said they are reconsidering their waiver approach. They added that blanket waivers should be made available in some cases, and appeared to be receptive to credit union suggestions that loan participants should not be required to request duplicate waivers if the lead lender in a loan participation has acquired a waiver.

The agency added that it would work with credit unions to address issues related to Allowances for Loan Losses (ALL), ALL funding levels, and Asset Liability Management modeling issues.

The agency will hold the last of its scheduled listening sessions on July 31 in Denver, Colo., and Credit Union National Association (CUNA) will attend that meeting. CUNA and its examination and supervision subcommittee will follow up with the NCUA on key issues brought up during this and other listening sessions.

Registration for the final listening session is limited to the first 150 reservations. See resource link for more information.


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