KENNEWICK, Wash.–Small credit unions that are members of the Endangered Small Credit Union Defense (ESCUD) have sent a comment letter to NCUA related to a proposal to exempt small credit unions from bond insurance renewal regulations.
The group, which was founded by Doug Wadsworth, president of the $75-million Tri-CU Credit Union, told NCUA that smaller CUs shouldn’t be punished for the actions of one.
“Since time immemorial credit union CEOs have been responsible to ensure they have the proper bond insurance, and this is just part of their job,” the comment letter states. “Every time examiners come, they review this coverage to ensure it is compliant with the regulation. Volunteer boards of directors have never had to be very involved. Renewal was fast and easy, and worked perfectly 99.9999% of the time.
“There are an infinite number of ways that fraudsters can scam the system, and it isn’t feasible to introduce a regulation for each remote possibility, but apparently some credit union somewhere failed to get the adequate level of insurance or doctored the documents, so that their credit union wasn’t adequately insured, and a loss resulted,” the letter continued.
New Hoops
Despite a half-century of working with no problems, ESCUD told NCUA there are a “bunch of new regulatoryhoops” that must be jumped through each year and that require involvement by the more and numerous other steps.
“If your small CU doesn’t do it exactly right, you then risk getting written up by the examiner,” the letter states.
“Despite the regulation now being many times more complicated and burdensome than before, it seems just as ineffective in reducing the risk of a loss, because criminals can always figure out some new workaround,” the letter goes on to state. “Hence, there doesn’t seem to be any benefit to the credit union, or the insurance fund – just more work for the credit union, more work for the volunteer directors, more work for the examiner, longer examinations and more DORs in areas that don’t impact safety or soundness.”
ESCUD is calling on NCUA to exempt CUs below $500 million in assets from the “complex new bond renewal procedure and board member signature requirements.”
The Signatories
Members of ESCUD include:
- Granco Federal Credit Union (Ephrata, WA)
- Mint Valley Federal Credit Union (Longview, WA)
- Nordstrom Federal Credit Union (Everett, WA)
- Tri-CU Federal Credit Union (Kennewick, WA)
- Connection Credit Union (Silverdale, WA)
- Spokane Media Federal Credit Union (Spokane, WA)
- Spokane City Credit Union (Spokane, WA)
- Evergreendirect Credit Union (Tumwater, WA)
- Prime Source Credit Union (Spokane, WA)
- IBEW 76 Federal Credit Union (Tacoma, WA)
- Community Healthcare FCU (Everett, WA)
- United Trades Federal Credit Union (Tulatin, OR)
- POLAM Federal Credit Union (Las Angeles, CA)
- SEG Federal Credit Union (Laurel, MT)
- Milestones Federal Credit Union #5144 (Lewiston, ME)
- Good Neighbors Federal Credit Union (Depew, NY)
- IBEW 26 Federal Credit Union (Lanham, MD)
