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CU Leaders Testify on Exam Fairness

On February 1, Ken Watts, President and CEO of the West Virginia Credit Union League, testified on behalf of CUNA before the House Financial Institutions Subcommittee on H.R. 3461, the Financial Institutions Examination Fairness and Reform Act. NCUA Executive Director Dave Marquis and JetStream Federal Credit Union CEO Jeanne Kucey also testified, along with representatives from the Federal banking regulators and other banking trade associations.

The regulators testified on the first panel and expressed opposition to the legislation, which would give financial institutions more information about the decisions and findings made during their examination, codify certain examination procedures and set up an independent ombudsman and appeal process in the event of disputes.

Members of the Subcommittee pressed the regulators on issues of exam consistency, retaliation, as well as their views on the creation of an examination ombudsman and independent examination appeals process. There were a couple of questions noteworthy to credit unions.  The first came from Representative Mel Watt (D-NC), who asked Marquis to explain why the NCUA has decided to conduct independent exams of state chartered credit unions in North Carolina. The second came toward the end of the first panel when Representative Don Manzullo (R-IL) expressed extreme concern with NCUA’s practice of failing to cite statutory and regulatory authority for material supervisory decisions in the exam process.

Witnesses on the second panel generally testified in support of the legislation. Ken Watts did an extraordinary job responding to questions relating to the fear credit unions have of retaliation if they appeal exam decisions, as well as the decision with the North Carolina state credit unions.

This hearing gave us the opportunity to express to Congress the concerns we have heard from many credit unions over the years with their issues with exams. 

In terms of next steps, the Subcommittee intends to review the recommendations made at the hearing and revise the legislation as appropriate.  It is believed possible the Subcommittee could mark up this legislation later this year. CUNA intends to continue to work with Chairman Capito (R-WV) and Ranking Member Maloney (D-NY) on this issue.

For more information, contact Peggy Nalls at 800.392.3074, ext. 1305.

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