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The fact that credit unions have concerns with the conduct
and fairness of their exams surprises no one.
To bolster advocacy efforts on this issue, CUNA conducts an ongoing
examination survey, giving credit unions the opportunity to provide
feedback on their exam experience and providing us with data to use in our advocacy
efforts with NCUA. Dissatisfaction with
examinations remains too high. This year more than three quarters of credit
unions said that heavier regulatory and examination requirements are putting
increased pressure on their credit unions.
About half of those surveyed said that examiners are applying guidance
and best practices as if they had the force of regulation.
While the numbers in general are somewhat improved compared
to 2013 when we began the survey, they still speak to a need for reform, which
is why CUNA supports H.R. 1941 / S. 774, the Financial Institution Examination
Fairness and Reform Act (FIEFRA). FIEFRA
would bring fairness to the examination process by creating an independent
ombudsman and an independent appeals process for examination disputes. This means that instead of credit unions
complaining about or appealing the decision of their examiner to his or her
supervisor, they would have someone to go to at the Federal Financial
Institution Examination Council to lodge their complaint. We think this will help make an appeals
process that has rarely, if ever, worked for credit unions, better.
The good news is that these provisions were included in
broader regulatory relief legislation that the Senate Banking Committee passed
this year and they were also included in the Senate Appropriations Committee’s
Financial Services and General Government Appropriations bill, meaning that
they are positioned as well as they could be to potentially see action later
The Cooperative Credit Union Association sent letter to NCUA this
week addressing an issue that isn’t covered in the legislation: the frequency of examinations. While we quite regularly bemoan the
prescriptive and restrictive nature of the Federal Credit Union Act, frequency of
credit union examinations is one area where that is not the case. While the Federal Deposit Insurance Act
requires annual exams for banks above $500 million in assets and an 18-month
exam cycle for banks below $500 million, the Federal Credit Union Act gives the
NCUA Board wide latitude to set the frequency of examinations. Some may remember that prior to 2009, many
credit unions were on an 18-month cycle; like so many other things, that
changed with the financial crisis and credit unions were brought under an
annual exam cycle.
We agree it’s time for NCUA to adjust the examination cycle,
which is why we have encouraged them to do so, and we have asked Congress to
help. In a letter
to the House Financial Institutions and Consumer Credit Subcommittee earlier
this summer, we asked the Subcommittee to urge NCUA to “refine the examinations
to be more consistent with the examination cycle for banks.” But it should not take an Act of Congress to
do this: NCUA has the authority, and
more than five years after the crisis, it is prudent and appropriate for the
agency to take a close look at this. We
will continue to press them to do so.
Champion for the Credit Union Movement
Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.
© 2017 Credit Union National Association
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© 2017 Credit Union National Association |
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