Reg Burden, IRR and Communication During Examinations Hot Topics of NCUA's Listening Session

May 14, 2012 -  NASCUS participated in the National Credit Union Administration (NCUA) Listening Session on May 9 in Alexandria, Va. This was the second in a six-part series aimed at providing opportunities for dialogue between NCUA and credit unions.

NCUA Chairman Debbie Matz opened the meeting with brief welcome remarks and next Larry Fazio, Director of Examination and Insurance, discussed understanding the various roles of examiners and credit unions during an exam adding that NCUA and credit unions share the goal of a safe and sound credit union. He also commented that a healthy tension was good for examiners and credit unions and that the parties can "disagree but shouldn't be disagreeable."

The audience was then given time to discuss top priorities and challenges to be shared with the greater at their tables to be shared during open discussion. One of the main challenges discussed during the session was regulatory burden. Credit unions remarked about the problematic nature of the piecemeal approach to rulemaking with no overall picture of what's coming. Credit unions sounded concern about the 25 percent proposed concentration threshold in the pending loan participation regulation. In response, NCUA remarked it would not likely be part of the final rule. 

Fazio also discussed its outlook on risk for credit unions. He said as a whole, the system has big stake in real estate market which gives credit unions high exposure to vulnerabilities in employment, real estate and economic issues. This systemic exposure concerns NCUA, as well as interest rate risk in this low interest rate environment. Longer term, they are also concerned about overall competitive environment for the system and credit union capabilities.

The group also discussed the state of credit union examinations. NCUA shared that its planning to implement a new small credit union exam program aimed at spending less time in smaller institutions. In addition, the agency highlighted that it's enhanced Office of Small Credit Union Initiatives has launched various programs to aid small credit unions.

Credit union representatives also inquired about the agency's Document of Resolution (DOR) process. Credit unions remarked that DORs were more common in recent exams and that some items didn't seem to belong in DOR. Dave Marquis, NCUA Executive Director, replied that training on DORs is continuing and there are cases where items belong in "Examiner's Findings" rather than the DOR.

The next Listening Session is scheduled for June 5 in Saint Louis, Missouri. See the other dates and cities at this link.