MARLBOROUGH, Mass.—The Cooperative Credit Union Association is urging NCUA to return to an 18-month exam cycle for well-run credit unions.
The letter argues that the strong health of credit unions means it’s time for NCUA to stop taking an examination approach based on the economic crisis.
“I believe that moving exams to an 18-month cycle does not threaten safety and soundness and will not add significant or systemic risk,” said CCUA President Paul Gentile in the letter. “In reality, it will lower risk because an extended cycle allows examiners to spend resources in credit unions that need additional attention. It also permits flexibility to examiners to monitor emerging issues that require both examiner and credit union education, training and preparedness. Furthermore, an extended exam cycle allows credit unions to spend more time serving their consumer members and their communities.”
Gentile wrote that NCUA has better capabilities to analyze data on credit unions and use that data to spot troubling trends that may require more frequent on-site exams. The agency should use its ability to analyze credit union data to conduct more precise exams and hone in on credit unions that need attention, the letter suggests, citing NCUA’s AIRE technology platform as one example.
Gentile said that risk is best managed by finding the credit unions that need more attention, not spending more time in those credit unions that don’t. He also called on the federal regulator to better leverage state regulators.
“NCUA’s current shortened examination policy impacts all federally insured credit unions with assets in excess of $250 million,” Gentile stated. “I continue to remain concerned about the operational and financial impact on all credit unions from the implications of this practice. In addition, I note that it also uniquely impacts state chartered credit unions as they are subject to their prudential regulator examination. While joint state/federal examinations are a goal, scheduling and regulator conflict have resulted in some state-chartered credit unions experiencing two separate on-site exams in a 12-month period.”
A full copy of the letter can be found in CUToday.info’s The Gov here.