By Vic Pantea
As credit unions fight to stay ahead in the face of mounting competition and operating expenses, looming regulatory changes are the straw waiting for the perfect time to fall on credit unions’ back. And holding the straw, with the power to either cripple or to ease the burden, is the NCUA.
Earlier this year, NCUA published its 2015-2016 Annual Performance Plan, which outlines the resources and strategies NCUA will use to achieve agency priorities and improve agency performance. In it, NCUA included some implied objectives relating to improving the examination process (particularly objectives 1.2, 1.3, and 4.2). A month later, NCUA released an RFI on the AIRES revamp (NCUA RFI-15-0001).
Although it is good to see the NCUA is making an effort to improve the examination process, some red flags have been thrown up. Despite what is likely to be a significant investment of credit union capital to complete the AIRES revamp project, there appears to be no indication that the project will include garnering the thoughts, suggestions, and input of vital stakeholders.
How can any contractor even give an estimate of total project costs without including the costs of focus groups, questionnaires, group meetings, and surveys of credit union management teams, credit union IT providers, and state supervisory agencies? The RFI, as is, makes it appear that the project requirements are being totally driven within the vacuum of the NCUA. Given the expected cost and scope of development, it would be a serious mistake to not involve the outside stakeholders and especially so if the credit unions, who are funding the project, find that they play no role in the development process.
Regulator More Concerned About Itself
These are the signs of a regulatory agency perhaps more concerned with its own operations than of those it’s meant to regulate. A true win-win solution will require Examination Innovation. It will require credit unions to speak up, to get their vendors involved, and to offer ideas to NCUA that will be mutually beneficial. Speed the pace of information transit through new technology, reduce the operating costs of the NCUA, and likewise the financial burden the existing system places on CUs.
The examination process can be modernized and re-engineered with the objective to both decrease the costs of examination while improving the timeliness, effectiveness and efficiency of regulatory oversight. But it will require all to contribute. Otherwise, by continuing with a one-sided approach we may find, as Oscar Wilde put it, that “The bureaucracy is expanding to meet the needs of the expanding bureaucracy.”
Vic Pantea is Manager of Marketplace Alliances with CU*Answers, Grand Rapids, Mich.