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NCUA Making Major Changes in Examination-Related Documents

The National Credit Union Administration (NCUA) is “making some major changes in its examination-related documents.” That is what NCUA Deputy Director of Examination and Insurance Tim Segerson told Credit Union National Association's (CUNA) Examination and Supervision Subcommittee.  These actions are designed to “help credit unions understand why examiners do what they do, set a baseline for everyone to follow, and to help credit unions get organized for examiners,” according to Segerson.

Segerson informed the subcommittee that the agency plans to implement a uniform pre-examination letter that examiners would be required to provide to credit unions regarding upcoming examinations. The letter would describe key areas for review and documents, etc. that the examiner would like to review during the examination. CUNA questioned how much in advance of the examination the letter would be provided to credit unions, and Tim said to follow up with suggestions on the time frame. The agency is also going to include a cover document with the examination report that addresses what a credit union should do if it doesn’t agree with its examiner, the agency’s appeals process, and six levels of appeal at NCUA. A letter to credit unions will be sent from the agency in the coming weeks about the examination documents, which are designed to “help credit unions understand why examiners do what they do, set a baseline for everyone to follow, and to help credit unions get organized for” their examination. 

Segerson also reinforced that financial trends at credit unions continue in positive directions, even though some pockets of the country are still struggling.  The “industry itself has adjusted to the financial crisis, and adjusted well for recovery,” he said.  Issues he said NCUA is following from a safety and soundness standpoint are that no one is sure how the problems in the European economy might impact the U.S. economy.  He added that the student loan market is a small portion of the balance sheet of credit unions, but is growing and NCUA is trying to make sure it understands this market.  He also said the agency is conducting extensive research on credit union self-funded benefit plans, which are essentially off-balance sheet.  He said some include “exotic” funding methods, and NCUA needs to evaluate what the risks are with these plans.

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