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Washington
Risk, simpler exams are NCUA 2014 supervisory priorities
ALEXANDRIA, Va. (1/13/14)--High-risk activities and a simplified, forward-looking exam will be the National Credit Union Administration's supervisory focus in 2014, NCUA Chairman Debbie Matz said Friday in her Letter to Credit Unions (14-CU-02).

"As credit unions have steadily recovered from the financial crisis, NCUA is now able to devote more resources to focusing on the future of the credit union industry," Matz said, in letter to credit union CEOs and directors. She said that the agency's priority is to identify and minimize risks "before they threaten the viability of credit unions and the stability of the (National Credit Union) Share Insurance Fund." 

NCUA examinations will hone in on new rules, such as those dealing with loan participations, mortgages and credit union service organizations (CUSOs). They also, penned Matz, will gauge how credit unions are managing risks on the balance sheet, in technology and with new loan products.

Matz said that the NCUA will "streamline the exam process," and will issue a revised examination policy allowing examiners more leeway to expand or narrow an examination based on an initial evaluation. The agency, she said, will address which areas of review are required for an exam, which areas are recommended, and other aspects of a credit union that examiners might want to assess based on its risks.

The Credit Union National Association has regularly pushed for the NCUA to provide "increased clarity" in its oversight process, and has asked examiners to refrain from punishing credit unions or conducting supplementary reviews "for subjective reasons that are not based on legitimate and material safety and soundness concerns." 

Matz wrote that interest-rate risk, cybersecurity threats, money service businesses, and private student lending will specifically be scrutinized this year.

"NCUA's primary responsibility is maintaining the safety and soundness of the credit union system," she said. "This involves supervising credit unions and enforcing compliance with rules intended to strengthen them."
 
CUNA is again encouraging member credit unions to complete its online National Examinations Survey after taking the exam this year. It will aggregate the information and use it when advocating with the NCUA on behalf of federally insured credit unions. 
The NCUA, meanwhile, is hosting a Jan. 22 webinar on its exam modernization efforts.
 
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