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NCUA to shift exam focus to largest CUs
ALEXANDRIA, Va. (7/27/12)—Noting that one-size-fits-all supervision is "no longer appropriate in a credit union industry with nearly 100 million members and more than $1 trillion in assets," National Credit Union Administration (NCUA) Chairman Debbie Matz on Thursday announced a new office that will focus on regulating corporate and high-asset credit unions.

The NCUA said the new Office of National Examinations and Supervision, which is scheduled to be up and running by Jan. 1, 2013, will allow the agency to concentrate more hours and more attention where more of the industry's risk is held. Oversight and examination of corporate credit unions and credit unions with more than $10 billion in assets will be the main priorities for the new office.

The office will begin examination and oversight of corporates on Jan. 1, 2013, and will take on oversight of large credit unions on Jan. 1, 2014, the agency said.

Credit Union National Association (CUNA) President/CEO Bill Cheney said the announcement is in line with recent NCUA indications that it would devote a greater amount of resources to the oversight of larger credit unions.

"However, if the intent of this action is to place undue supervisory attention on well-managed, larger credit unions, that would be cause for concern at CUNA," he said. CUNA's Examination and Supervision Subcommittee will be scrutinizing this plan closely and will have further discussions with the NCUA board and agency staff, he added.

Nearly half of all NCUA examination hours are spent on credit unions that hold less than $50 million in assets, while credit unions with more than $1 billion in assets receive only 10% of NCUA examination hours, the agency noted in a release. The NCUA will spend less time examining well-performing small credit unions once the new office is established, the release added.

The new office will strengthen exam consistency and leverage national and regional expertise to promote high quality evaluations of risk and risk management practices, Matz said. "This is not about keeping credit unions from getting too big to fail; it's about keeping them from failing," she added. The new examination office was one of many NCUA initiatives announced at the National Association of Federal Credit Unions Annual Conference in Nashville, Tenn. (See related News Now story:  Short-term loan, teller changes among items on NCUA short-list)

The agency also announced a new Small Credit Union Examination Program (SCUEP), directed toward credit unions with less than $10 million in assets, last week. The SCUEP program is intended to streamline the examination process for small credit unions that have a solid record of performance, meaning, in part, a CAMEL rating of 1, 2 or 3.

"Small credit unions that are financially and operationally sound and present lower risk will typically have shorter examinations and more concise examination reports," the NCUA said in a letter to credit unions. (See related July 23 News Now story: Small CU examinations addressed by NCUA)

Examinations have been a top topic at recent NCUA listening sessions, with many credit unions criticizing NCUA examiners for their overuse of Documents of Resolution. Others have called for greater communication between examiners and credit union staff, and noted that receiving two separate lists of regulatory requests, from NCUA and state examiners, can create issues for credit unions.
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