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NCUA Letter Says the Agency Is Addressing DoRs

Credit Union National Association (CUNA) has been urging the National Credit Union Administration (NCUA) to improve the examination process and provide more information to credit unions about its examination priorities and practices. Consistent with previous years, the agency has sent Letter 13-CU-01 to the board and chief executive officers of all federally insured credit unions regarding its supervisory focus for 2013. However, in response to CUNA concerns and others, the letter addresses the agency’s efforts to incorporate issues that have been raised about the examination process.

The letter states that the agency continues to work to improve consistency in the use of Documents of Resolution (DoRs) and the application of the agency’s new National Supervision Policy Manual.

“NCUA continues to incorporate lessons learned and feedback from credit unions into our examination approach,” NCUA Board Chairman Debbie Matz said in the letter.

The letter says that the agency wants to “enhance” clarity in the examination process. 

NCUA said it plans to issue a supervisory letter regarding the MBL rule waiver process. The letter will address waivers for person guarantees and blanket waivers versus individual waivers for aspects of the rule. In addition, it will address underwriting and creditor monitoring for MBLs. The agency is also covering troubled debt restructurings (TDRs) in the letter. NCUA will provide additional guidance for examiners on examining for compliance with the TDR rule’s requirements and 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 areas 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.

Improving the examination process will remain a priory for CUNA. About 1,300 respondents have provided information about their examination experiences- on
this key topic in a recent CUNA survey. Credit unions also described the strengths and weaknesses of the examination system.

CUNA will provide summaries of the information; one that provides nationwide information and a second that provides results on a state-by-state basis. Results
of the survey will be released in time for this year’s CUNA Governmental Affairs Conference, February 24-28 in Washington, D.C.
 

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