ALEXANDRIA, Va. (2/1/13)--Increased clarity in its guidance to its examiners and more consistency in its examination practices are a key supervisory focus of the National Credit Union Administration this year, said NCUA Chairman Debbie Matz in a Letter to Federally Insured Credit Unions released Thursday.
"As a regulator and insurer, NCUA's goal is a strong, safe credit union system. To that end, NCUA continues to incorporate lessons learned and feedback from credit unions into our
examination approach," Matz said to open her letter to credit union directors and CEOs.
The Credit Union National Association often has encouraged the NCUA to provide this "increased clarity" on its examination process and called the NCUA supervisory focus a positive development.
Areas in which NCUA will strive to enhance the clarity of examiners include member business lending (MBL), credit rating, and troubled debt restructurings (TDRs).
Matz said credit unions can expect a supervisory letter to add clarity to the process and expectations for MBL rule waiver requests. The letter will address, in particular, waivers for personal guarantees and blanket waivers versus individual loan waivers for aspects of the MBL rule. The guidance will also focus on appropriate underwriting and credit monitoring systems for MBLs, Matz said.
The agency also will issue follow-on guidance for examiners and credit unions on complying with the final rule, required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, replacing the use of credit ratings with alternative standards to assess the creditworthiness of securities and money-market instruments.
Also, based on the final NCUA rule on TDRs, the NCUA will provide additional guidance for examiners on examining for compliance with the rule's requirements and the credit union's accounting practices related to TDRs.
Matz indicated that examiners will combine an awareness that federally insured credit unions continue to exhibit positive trends in most key while also continuing to evolve and face various economic and operational challenges.
The letter said examiners will evaluate a credit union's capacity to manage risk in the following areas:
- Operational risk involving technology and internal controls; and,
- Balance sheet management, including interest rate and liquidity risk, concentration risk--where a credit union might offer "too much of a good thing," and risk that can be associated with offering less established or complex products.
Use the resource link below to read the NCUA letter.
CUNA also is honing in on exam issues this year. In fact, 1,300 respondents took the time to detail their experiences--good, bad and in-between--on this key topic in a recent CUNA survey.
The CUNA survey asked credit unions to detail their experiences with on-site NCUA and state regulatory examinations, and to describe their satisfaction level with both the federal and state examinations process. Credit unions also described the strengths and weaknesses of the examination system.
Later this month, CUNA will provide summaries of the information garnered; one with nationwide information, and a second that breaks the results down on a state-by-state basis.
Results of the survey will be released in time for this year's CUNA Governmental Affairs Conference. The conference is scheduled for Feb. 24-28 in Washington, D.C.