ARLINGTON, Va.—NCUA is being urged to cease all examination activity and make other regulatory adjustments that would alleviate strict compliance requirements currently in place for credit unions.
NAFCU President and CEO Dan Berger made the request, pointing to the Federal Reserve’s announcement earlier this week ceasing all regular examination activity for institutions under $100 billion in assets and holding all examinations off-site to help minimize disruption and burden on financial institutions.
“NAFCU requests the NCUA issue a statement adopting a similar approach for the credit union industry,” Berger suggested. “NAFCU does not support an arbitrary asset threshold as the deciding factor for which institutions receive an off-site examination versus no examination at all, but instead urges a risk-based analysis and approach to deciding whether safety and soundness concerns or another urgent need demands an examination now instead of deferring to later in the year.”
Focus on Off-Site Exams
Although NCUA’s updated FAQs indicate the agency will be focused on off-site examinations through its secure information exchange portal, the entire examination process may pose substantial burden for credit unions at this time. In addition, the burden may be amplified in rural areas where staff working from home may have limited or slow Internet access.
“Considering all credit unions across the country are affected, to some extent, by COVID-19, this extraordinary situation warrants a pause on examination activity until the fall of 2020 to allow credit unions an opportunity to focus on working with and meeting the needs of their members,” wrote Berger.
Additional Requests
Additionally, Berger asked NCUA to provide several relief measures aimed at simplifying the processes of loan modifications, appraisal requirements for mortgages, and limitations on carrying and charging off negative balances.
The Senate-passed Phase 3 coronavirus relief package, the CARES Act, which provides NCUA with broad authority to suspend generally accepted accounting principles (GAAP) requirements with respect to loan modifications related to the coronavirus that would otherwise be categorized as troubled debt restructurings (TDRs).
“NAFCU and its member credit unions urge you to act swiftly to address these issues as consumer hardships and economic realities have already started to impact credit union operations,” Berger concluded.