PORTLAND, Ore.–Three regulators, including one from NCUA and two state regulators, offered some insights into where they are focused. Here’s a look at what they had to say to the NWCUA’s Amplify meeting here:
Three Areas of Attention–Plus Some HR Issues
Linda Whitehead, NCUA’s regional director for Region V, said examiners are focused on three areas: cybersecurity, interest rate risk, and BSA compliance.
She said she, as well as the agency, are also focused on smaller credit unions below $50 million in assets.
In terms of cybersecurity, she encouraged credit unions to use the tools on NCUA’s website at (www.ncua.gov), and noted examiners will begin using the cybersecurity assessment tool from the FFIEC in 2016. With IRR, Whitehead said in Region V the level of risk has declined and largely been addressed. And with BSA, it is focused on money service businesses.
Meanwhile, while not a formal program, NCUA is focused on small credit unions on internal controls, record keeping (especially as it relates to fraud), and lending.
Closer to home, Whitehead there is one staffing problem to be discussed–and it’s not at credit unions.
“We want to hire really good examiners, and it is a challenge, because we have credit unions that keep hiring our staff,” said Whitehead. “We have also lost them to the FFIEC. We are constantly hiring, so realize we try to get them up to speed as quickly as we can. Internally, we are also doing something different with our Special Actions Team. They usually focus on larger CUs that are more complex with serious problems. Now, because credit unions are doing much better, the team is not being assigned to problem CUs and we are assigning them to the CAMEL 2’s and 3’s. I know credit unions can get concerned, but this has worked out very, very well, and credit unions have begged me to keep the staff on site. They are there to provide expertise.”
Whitehead also addressed the issue of mergers, saying she "hates" to see them, as CUToday.info reported here.
An Unimaginable Problem (Plus More HR Issues)
PORTLAND, Ore.–Linda Jekel, Director of Credit Unions for the State of Washington, said one of her concerns is something that was almost unimaginable five years ago: liquidity risk.
“Several of our credit unions are getting close to being fully loaned out. So you may have examiners asking you how you manage liquidity,” said Jekel. “We’re also looking at credit risk management and consumer compliance.”
Like NCUA’s Whitehead, Jekel also acknowledged, “We also have had big staff turnover this, year, including half of our staff.”
Other observations shared by Jekel:
- “Every year we look at the Washington CU Act,” said Jekel. “We are looking at the supervisory committee section and making sure supervisory committee responsibilities are part of the rule so they know they are not there to sit in judgment of the board. They are there to ensure the credit union is in compliance with its decision.”
- Jekel said that since the rules were changed in Washington to allow credit unions to compensate boards, five of the 60 state charters have moved to do so. “I think there will be more as we look to the future and you look to recruit the best talent for the boards.”
Working Out Rules For Paying Board Members
PORTLAND, Ore.–Similar to Washington, Oregon is also allowing compensation for board members at state charters.
Janet Powell, Credit Union Program Manager with the state’s DCBS, which oversees 20 state charters, said her department will be looking for credit unions to put in place a policy for how they has arrived at what is reasonable compensation, and the basis for deciding what people will be paid.
“There should be good disclosure to the members, and it should be included in the bylaws,” said Powell.