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NCUA addresses N.C. exam situation
WASHINGTON (2/9/12)--National Credit Union Administration (NCUA) Chairman Debbie Matz said Wednesday that her agency supports the dual-chartering system and works closely with state regulators. However, when a state regulator "violated the trust of confidentiality of CAMEL ratings," the NCUA had no choice but to end its joint examinations.

The NCUA chairman was referring to a recent development where the North Carolina credit union regulator allowed State Employees CU to make its CAMEL rating public.

The CAMEL rating system is NCUA's method of evaluating the health of credit unions. The rating, adopted by the NCUA in 1987, is based upon five critical elements of a credit union's operations: (C) Capital, (A) Asset quality, (M) Management, (E) Earnings and (L) Asset liability management.

"We take confidentiality very seriously," Matz said, adding that if such confidentiality regarding examinations and CAMEL ratings is breached, it will cause problems for the credit union system.

NCUA Executive Director David Marquis added that a lack of confidentiality would affect how the agency's examinations are conducted. He also expressed concern that releasing CAMEL codes could create liquidity pressures, make it difficult to resolve problems, and increase losses in the National Credit Union Share Insurance Fund (NCUSIF).

Matz said the NCUA's decision to examine North Carolina state-chartered credit unions was not meant to be burdensome to credit unions, and that the agency wants to be "in and out" as quickly as possible.

The state regulator has only to end the "pilot program," and SECU to take its CAMEL rating off its website, and the issue will be resolved, Matz emphasized.

The NCUA officials made their remarks during a joint Town Hall session conducted with the Consumer Financial Protection Bureau.

A credit union participant of the joint session asked if credit unions will see an increased NCUSIF assessment because of the North Carolina situation, to cover the cost of the additional examinations.

NCUA's Marquis responded that these examinations only require "a very minor cost outlay" by NCUA. He said that it's only taking 1.5 full-time equivalent (FTE) employees to conduct these examinations, and the agency will be able to absorb that expense without an increased assessment.

The Credit Union National Association urged the NCUA this week to resolve differences regarding disclosure of a credit union's CAMEL rating and the use of dual exams as soon as possible.

For more on the Town Hall session, read Friday's News Now.


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