NCUA will respond to exam 'temperance' letter

WASHINGTON (11/9/09)--The National Credit Union Administration (NCUA) will respond with a letter this week to Rep. Barney Frank's (D-Mass.) request that federal regulators "show some temperance" during their examinations of financial institutions, NCUA Director of Public and Congressional Affairs John McKechnie told News Now.

In a letter sent to NCUA Chairman Debbie Matz and the other federal financial regulatory leaders, Frank and co-signer Rep. Walter Minnick (D-Idaho) asked for the regulators to take a temperate approach to examinations so financial institutions "can continue to lend money to help the economy improve."

The legislators criticized seemingly tightening capitalization standards that have forced some financial firms to restrict their lending practices, and noted that CAMEL ratings should give greater weight to an institution's liquidity and core earnings instead of focusing so closely on asset quality.

"While our regulators need to uphold safety and soundness standards in this difficult economy, unnecessarily aggressive decisions made in the field by individual examiners or teams" that require capital in excess of the "official regulatory standard" for being well capitalized "must be avoided" to prevent unnecessary failures.

"We are calling upon you to take the long view" and to use "wisdom and experience" to to guide field staff, Frank and Minnick wrote.

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