Removing Barriers Blog

House Sends Letter to NCUA in Support of Extended Exam Cycle
Posted February 19, 2016 by CUNA Advocacy

A CUNA-supported letter signed by a bipartisan group of thirty members of the House of Representatives was sent to urge NCUA to lengthen the exam cycle for credit unions to 18 months.  The letter, authored by Representatives Frank Guinta (R-NH) and Ruben Hinojosa (D-TX), specifically asks the regulator if it plans to “move toward an extended examination cycle for credit unions in 2016?” and “If so, what is your timeline?  If not, why not?”.

Last year, the House passed unanimously passed H.R. 1553, the Small Bank Exam Cycle Reform act of 2015.  This legislation allows more small insured banks to qualify for the 18-month examinations cycle.  This bill ultimately became law as part of the FAST Act (P.L. 114-94) but does not apply to credit unions.  The letter simply urges the NCUA to apply this same common-sense exam treatment to financially sound, well-managed credit unions.  This is an authority that NCUA already retains but has chosen not to implement.  Recently federal banking regulators took the first step in this direction by issuing an interim final rule for banks that may qualify for the extending examination cycle.

NCUA has an important role in ensuring the safety and soundness of federally-insured credit unions.  Prior to the financial crisis in 2008 and the subsequent Dodd-Frank Act, the NCUA followed an 18-month schedule that promoted efficiency and effectiveness.  The Guinta-Hinojosa letter recognizes that credit unions did not cause the financial crisis.  Increased regulatory burdens are having the effect of driving smaller credit unions into mergers or out of the business entirely.  This consolidation must be reversed.  CUNA has noticed several recent indications that the NCUA may be headed down a path toward fewer exams and CUNA urges the agency to follow through on this common sense reform.