WASHINGTON—CUNA is hoping that during NCUA’s open board meeting Thursday the agency will provide more insights into the possibility of extending the exam cycle for well-run credit unions to beyond one year.
Last Thursday NCUA Board Chairman Rick Metsger said the agency is initiating a review of NCUA’s examination process, beginning with the removal of the requirement that all federal credit unions, and all federally insured, state-chartered credit unions with more than $250 million in assets, be examined each calendar year.
Metsger said he hopes to implement that change within the next two months. Removing the calendar year requirement will not alter the general objective of examining credit unions every 12 months, he said, but it is a necessary first step towards establishing an extended examination cycle for well-managed, financially sound credit unions.
“We hope that Thursday we will get more clarity on the announcement,” said Lance Noggle, CUNA senior director of advocacy and counsel. “By NCUA removing this requirement, we think this is a movement by the agency to extend the exam cycle because the lack of the annual requirement gives them flexibility.”
CUNA Chief of Staff Rich Meade called Metsger’s announcement last week a big victory for credit unions.
“CUNA has been a leader on this issue,” said Meade, noting that CUNA President and CEO Jim Nussle recently had a meeting with Metsger on the topic.
NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt also was positive about the NCUA announcement.
“We appreciate Chairman Metsger’s response to our concerns about credit unions’ exam cycles and continue to urge the agency to implement a longer exam cycle as soon as possible,” Hunt said in a previous report. “Healthy credit unions that have acted responsibly should not have to deal with such frequent exams, which are unnecessary and burdensome for the industry.”
NAFCU President and CEO Dan Berger, accompanied by Hunt, met with Metsger in April to discuss exam frequency as well as how NCUA could do more to reform field-of-membership requirements.
NASCUS, as well, has weighed in on NCUA’s announcement.
"The calendar year requirement is a burden on both credit unions and state regulators. We welcome Chairman Metsger’s plans to review – and, hopefully, make a change within the next two months – to the required frequency of exams by the federal agency,” said NASCU President and CEO Lucy Ito. “From state regulators’ point of view, the annual exam requirement places the credit union system at a competitive disadvantage relative to the community bank system, for which the threshold is now $1 billion versus $250 million for credit unions. We also urge the chairman to include state regulators in any working group he appoints, as state regulators have firsthand insight into the relative risk posed by similarly sized credit unions and community banks. Past inclusion of state regulators on NCUA working groups has resulted in thoughtful, strong regulation for the entire credit union system."