|L-R: Lucy Ito, EVP and COO of the California and Nevada Credit Union Leagues; Dennis Flannigan, CEO of Great Basin FCU; Liz Whitehead, Region V Director for the National Credit Union Administration (NCUA); Dave Gunderson, CEO of Credit Union of Southern California; and Sharon Lindeman, Vice President of Regulatory Advocacy for the Leagues|
EXAM, REG ISSUES DISCUSSED WITH NCUA
updated 03/28/14 11:05 AM
Leagues, CEOs Relay Concerns
In a continuing effort to effectively communicate regulatory concerns, representatives from the California and Nevada Credit Union Leagues joined other western state league officials and credit union CEOs in a meeting with National Credit Union Association (NCUA) Regional Director Liz Whitehead (Region V) last week.
Nevada credit unions moved back to Region V from Region I as of Jan. 1, 2013. California credit unions moved back to Region V from Regions II, III, and IV by Jan. 1 of this year.
The Leagues’ representatives included President and CEO Diana Dykstra, Executive Vice President and COO Lucy Ito, and Vice President of Regulatory Advocacy Sharon Lindeman. Joining the Leagues were Dave Gunderson, CEO of Credit Union of Southern California and the Leagues’ Regulatory Advocacy Committee chairman, and Dennis Flannigan, CEO Great Basin FCU.
“The meeting was a tremendous success,” Gunderson said. “Liz Whitehead and her team invested several hours to listen to our comments, perspectives, and recommendations. It was refreshing to discuss the NCUA and credit unions’ common goal of ensuring safety and soundness, as well as some respectful dialog regarding different strategies to achieve this goal.”
Flannigan added: “The meeting entailed good open constructive communication and discussion of the exam survey and other key issues. Liz Whitehead and her senior staff all seemed practical and hesitant to strict oversight without considering the context.”
Lindeman noted that the event provided an “excellent opportunity” for open, collaborative dialogue about regulatory and examination issues. "We appreciate Director Whitehead making time in her schedule to hear our concerns,” Lindeman said.
CUNA Exam Survey Report
The Leagues obtained an advance copy of the CUNA/League 2013 Exam Survey Report, which provided a basis for good dialog, including:
As to the use of DORs, Region V senior staff commented that their objective of the exam modernization and changes to DORs is not to ensure the number reduces, but to ensure the DORs are used for material findings—those that could cause a credit union to fail.
In regard to Region V exam findings, the five most common exam issues included: loan policies, Allowance for Loan Losses (ALL), strategic planning, interest rate risk, and loan concentration. Whitehead said the higher percentage of findings in Region V could simply be a result of the region having a higher percentage of larger credit unions.
The Leagues encourage all California and Nevada credit unions to complete the joint CUNA/League Exam Survey in 2014. The aggregate data will help ensure California and Nevada credit unions’ exam experiences are captured, and any negative trends can be brought to the region’s attention.
Supervision Consistency and Quality Control
In an effort to realize greater consistency across all NCUA regions and in examinations from credit union to credit union, NCUA has adopted two programs since California and Nevada credit unions were previously part of Region V. First, all NCUA examination staff are now guided by the National Supervision Policy Manual (NSPM), the agency’s internal policy for supervisory operations and procedures.
Second, all regions, including Region V, now routinely carry out Quality Control Reviews (QCRs) to specifically identify and address exam inconsistencies. Credit unions that experience quality control issues may contact Region V staff directly or via the Leagues.
The proposed risk-based capital rule was discussed, including remarks on how an examiner can require even greater capital than the proposed rule sets for an individual credit union.
Whitehead commented that any “individual minimal capital requirements” would have to go through the regional director and to the NCUA board for approval; that such a requirement would not be established by an examiner. In addition, a credit union can appeal the decision.
The Leagues strongly oppose any greater authority for the NCUA to impose additional capital requirements on a case-by-case basis. The Leagues encourage credit unions to review the proposal, the information and resources available on the Credit Union National Association’s (CUNA) website and in PowerComment, and submit a comment letter to NCUA on this and many other concerns with the proposal before the May 28 deadline. The Leagues also encourage credit unions to register for and attend NCUA Chairman Debbie Matz’s June 26 “Listening Session” in Los Angeles. Due to space constraints, registration is limited to 150 people.
Also, click here to access CUNA’s Risk-Based Capital Action Center.
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