ALEXANDRIA, Va.–Should conversations between NCUA examiners and credit unions executives be recorded, similar to the way police officers wear bodycams?
That question was posed by NCUA Vice Chairman Kyle Hauptman during an agency board meeting discussion on prompt corrective action and net worth restoration plans. Both subjects can make for tense talks and disagreements between the regulator and the regulated.
Hauptman said he was prompted to ask the question of agency staff following an exchange with a league CEO who said credit unions had felt “pressured” by examiners on the issue of capital after deposit inflows had reduced their net worth ratios.
When Hauptman followed by asking for examples, the league CEO said CU execs in his state were “apprehensive” about doing so, fearing reprisals by the agency.
While Hauptman didn’t mention it, such reprisals have been a long-time allegation made by credit union leaders.
‘Unfortunate to Hear’
When asked by Hauptman why credit union execs feel “apprehensive” in raising concerns, Victoria Nahrwold, acting associate director in NCUA’s Office of Examination and Insurance, responded that it’s “unfortunate to hear there are individual credit unions that are apprehensive about providing too many details about their experiences with NCUA examiners.”
Nahrwold said the agency has taken several measures to ensure transparency and improve communications, including providing training to examiners and NCUA staff on communication strategies.
Nahrwold added NCUA’s National Supervision Policy Manual outlines special communication strategies for NCUA staff.
“The goal is to give NCUA management timely information and to provide ample opportunity to respond to any concerns,” she said. “We also improved our appeals procedures, which provide a detailed mechanism to appeal material supervisory decisions. NCUA has seen this successfully utilized by several credit unions in recent years.”
Nahrwold said any credit union dissatisfied with its exchange with any examiner should contact the supervisory examiner or their respective regional office.
She added the agency has no tolerance for retaliation.
Likely Legal, But…
Hauptman, who said the addition of bodycams on police officers improves accountability, asked about the legality of recording meetings between examiners and credit unions. While deferring to the agency’s general counsel, Nahrwold said it is her understanding it is legal if the agency is provided with a copy of the recording.
But Nahrwold said there are issues beyond legalities when Hauptman asked whether such recordings would increase, decrease or have no effect on transparency.
“I think that to the extent all parties know they are being recorded, they would use caution in the words they use and the topics they discuss, so you wouldn’t have inappropriate instances,” she said. “When conversations occur in the course of an exit meetings and they are trying to come to an understanding on corrective actions, I think the recording of the conversation could to some extent inhibit the free flow of the discussion and exchange of ideas for fear there would be repercussions over maybe a misstep or something they say or that it might not be protocol or follow the standard procedures. I think there could be unintended consequences.”
Concerns From Both Sides
Nahrwold said there would be concerns from both sides of the table.
“Maybe on the credit union side they might have questions they would normally ask where if it’s being recorded the credit union would not feel comfortable asking those questions for fear it could later be used against them somehow. Like they didn’t have all the answers or they should have known the answer to the question.”
Another example, said Nahrwold, could involve suspicions of fraud.
“(The credit union person) might be less inclined to do that if they are being recorded,” said Nahrwold.