KENNEWICK, Wash. — A small-credit-union advocacy group is asking newly sworn-in National Credit Union Administration Chairman John Crews to establish a nationwide policy allowing CEOs or other senior officials at smaller credit unions to attend examiner interviews with supervisory committee members and other volunteers, unless those officials request to meet privately.
Endangered Small Credit Union Defense, or ESCUD, said in a Sept. 2 letter to Crews that the change could be made through examiner guidance without a new regulation or congressional action.
ESCUD President Doug Wadsworth said NCUA staff have confirmed that no law or regulation prohibits a CEO from attending such interviews. He said the agency also has agreed to allow the practice at Tri-CU, the $75 million Kennewick credit union where Wadsworth serves as CEO.
ESCUD now wants the NCUA to formalize the practice nationwide through written examiner instructions and a Letter to Credit Unions rather than leave the decision to individual examiners.
Proposal Would Apply Below $500 Million
ESCUD’s proposal would apply to federally insured credit unions with less than $500 million in assets.
Under the proposal, a CEO or designated senior official generally would be permitted to attend examiner meetings with supervisory committee members, directors and other volunteers. At the beginning of an interview, examiners would tell volunteers they could request a confidential meeting at any time, including when they wanted to discuss concerns involving management.
Examiners also could ask the CEO to leave if they believed the executive was coaching or interfering with a volunteer’s responses.
“This is not a request to weaken Supervisory Committee independence,” Wadsworth wrote. “It is a request to stop an unofficial examination custom that is driving unpaid volunteers out of small credit unions and that channels over-compliance pressure through people who cannot reasonably be expected to push back.”
Wadsworth said supervisory committee members at small credit unions are almost always unpaid, making recruitment and retention particularly difficult.
ESCUD said the Defense Credit Union Council and National Small Credit Union Association have expressed support for the proposal and may join efforts to raise the issue with the NCUA.
ESCUD Cites Volunteer Resignations
ESCUD contends closed-door examiner interviews can intimidate volunteers, create confusion over technical issues and allow examiners to communicate what the organization characterizes as “best practices” through volunteers rather than directly with credit union management.
The group also alleged that some credit union executives fear challenging an examiner’s decision to exclude them because doing so could adversely affect an examination report.
Wadsworth cited several examples, including the experience of Monad Credit Union, a small institution that later merged. According to ESCUD, examiners “so severealy” questioned three supervisory committee volunteers about technical accounting issues that had been addressed through a CPA agreed-upon procedures engagement that all three volunteers resigned the same day, Wadsworth said.
Cam Uhling, Monad’s former CEO, now serves on Tri-CU’s board.
Exam Experiences Shared
Wadsworth also cited an examination at Tri-CU in which he said an examiner suggested the supervisory committee chairman reconcile the credit union’s monthly corporate credit union statement, a job Wadsworth said requires staff about 20 hours each month. The volunteer spent three hours attempting the task before giving up, according to ESCUD.
In another example, ESCUD said a West Coast small-credit-union CEO asked to attend examiner interviews to help volunteers understand examination acronyms and answer clarifying questions. According to the group, an examiner initially described the CEO’s attendance as “not allowed” and “inappropriate,” later allowing the executive into one volunteer interview but not the supervisory committee meeting.
“That is not independence,” Wadsworth wrote. “That is field practice substituting a personal preference for the regulation.”
Group Seeks Nationwide Examiner Guidance
ESCUD is asking Crews to direct examiners to make CEO or senior-official attendance the default unless a volunteer requests privacy. The group also wants examiners prohibited from characterizing such attendance as inappropriate or treating a credit union board policy allowing attendance as an examination finding or Document of Resolution.
The proposal also calls for examiners to use a brief opening statement informing volunteers of their right to speak privately at any time and for the same policy to apply to meetings with directors and other volunteer officials.
Wadsworth linked the request to Crews’ emphasis during his confirmation process on tailoring supervision for smaller and rural institutions. He also cited an ESCUD survey conducted in January that identified examination fatigue, examiner pressure to exceed regulatory requirements and what respondents viewed as unrealistic expectations of supervisory committees among significant burdens facing credit unions with less than $500 million in assets.
“A healthy CAMEL 1 or 2 small credit union can survive a well-written regulation,” ESCUD said in its letter. “It cannot keep replacing the three unpaid people who make Part 715 possible.”
ESCUD Credits NCUA With Other Changes
Despite its request for another change, ESCUD said the NCUA has taken several steps during the past year that have eased regulatory burdens on small credit unions.
Wadsworth cited the agency’s elimination of reputation risk from examinations, changes involving supervisory committee audits and account verifications, additional flexibility for board meetings at healthy credit unions and revisions to record-retention requirements.
“We are not asking the NCUA to look the other way,” Wadsworth said. “We are asking it to keep tailoring supervision so unpaid volunteers are not the ones who pay the price.”
ESCUD is a 501(c)(4) advocacy organization focused on regulatory issues affecting credit unions with less than $500 million in assets. The group said institutions formally endorsing it collectively serve more than 200,000 members and have approximately $1.5 billion in assets.
30 Responses
This is a very poor solution to the wrong problem, and if it made sense to allow it, what does it have to do with asset size? Indicative of what must be cat state of affairs of the quality of small CU boards when they have to be babysat and handheld. Can’t find board members with enough smarts or moxee to deal with regulators and fulfill their fiduciary duty, and the answer is to coddle them?
Without reading all of this, The NCUA, nor the State Examiners, let the President/CEO meet with Supervisory Committee, thus they (Supervisory Committee) have no real idea on what is going on at the CUs. – They (Gov’t) want our Supervisory Committee dummied down so no one can argue with their fake findings. (NCUA & State Examiners should be hired after they have been at least 10yrs working at a credit union.)
They don’t want them dumbed down (because it makes sense the regulator wants dummies on boards)
They want them independent. And if they need to phone a friend, they don’t belong on the board. Hard to believe some people still think small credit unions shouldn’t merge out
The comments from my *very* predictable anti-small-credit union friend are priceless, and demonstrate an obvious lack of understanding of what it’s like running a small credit union, let alone holding on to unpaid volunteers (especially when you have good ones who are engaged, and care about the members and community). Of course, this person doesn’t even believe in our cooperative credit union movement (rather it’s just an industry about money), or that there is any value in small credit unions serving members at the the hyper-local community level (based on comments this person has made on my earlier articles). So, no surprise here.
For some examples of what small CU CEOs (and volunteers) have to deal with, check out my “Hall of Horrors” https://www.endangeredcudefense.org/exam-hall-of-horrors
The answer shouldn’t be “stop existing” but rather – right-sizing regulations and examination to fit (not “one size fits all, like this commenter frequently advocates).
-Doug Wadsworth
Yes, because credit unions over 500 million have no horror stories or bad experiences with regulators. Don’t have qualified directors, don’t have money to spend on marketing, don’t provide all the products their members need, don’t have scale, etc. those are the symptoms of the problem that a 75 million CU can’t compete and don’t exist in 5 years. Getting a special set of rules and regulations can’t mask market reality, isn’t deserved, it divides the movement and discredits the industry – all which threatens the model and tax exemption. Let’s focus on rooting out the weak and stoping the fraud and failures f small credit unions. That’s what will help the industry.
So – “get rid of the small ones, to save the industry” is your solution? Ha Ha!
Not exactly. The solution is to stop the fraud and failures among small credit unions, all the
while asking for a special set of rules and lax regulations. That would be a huge start, the market forces will determine the rest.
Of course your solution completely left out “cooperative” principles – remember those?
Examiners have laundry lists of industry acronyms and names for different types of audits and regulations… unpaid volunteer shouldn’t be expected to have a perfect recall of all this (because… they are unpaid volunteers). That doesn’t mean the volunteers aren’t still fulfilling the regulations and doing a good job in their audit function. Small credit unions can’t afford to “outsource” every audit function of this committee to a third party, at small credit union these volunteers do it themselves often.
Having the CEO available in these interviews to answer questions and clarify misunderstandings (or gently push back on examiner over-compliance pressure), just makes sense. For example, I have an excellent Supervisory Chairman, she has been in the position for 20 years, and is a former bookkeeper and accountant. However, when the examiner starts grilling her about certain types of audits she doesn’t always remember which is which based on acronyms and examiner terminology, and that causes confusion, misunderstanding, and inaccurate examiner understandings of credit union performance and compliance. Why SHOULDNT an unpaid volunteer be able to “phone a friend” when an examiner starts throwing acronyms at them?
-Doug
Well said!
What does paid or unpaid have to do with? Does a non-paid director have less of a fiduciary duty than a paid director?
The issue you need to get is that “it happened one time at my credit union” shouldn’t equate to broad policy. What data do you have, which excludes an antecdote from your own one off that supports the assertion that small CU directors, at the industry level, are quitting because NCUA examiners are being mean to them?
Here are the harms that can be caused by only allowing “private” interviews with volunteers, as laid out in my letter to the NCUA:
1. Intimidation and resignation. Volunteers leave these meetings shaken. A director on our board, Cam Uhling, previously served as CEO of Monad Credit Union, a tiny institution that later merged out of existence. She has described an examination in which examiners questioned her three Supervisory Committee volunteers so severely—on technical accounting points tied to an agreed-upon procedures engagement the credit union had already contracted to a CPA—that the entire committee resigned the same day.
2. Confusion that a two-minute clarification would prevent. A West Coast small FCU CEO reported that a volunteer was challenged on her “qualifications for the job,” had to recite bookkeeping and small-business experience, and came out of the room so upset she nearly quit that night. In a later exam with kinder examiners, the same volunteer was still placed in a stressful “hot seat” because she did not recognize the terms used to distinguish types of audits she had already been performing. The CEO’s presence would have resolved the terminology in real time.
3. Over-compliance pressure routed through the volunteer. Examiners use the private meeting to urge volunteers to demand work the regulation does not require. The CEO then has to “push back” after the fact against advice that arrived through the credit union’s own unpaid officials. That sequence damages trust among the examiner, the volunteer, and management—and it creates busy work that does not improve safety and soundness.
4. Fear of retaliation if the CEO even asks to attend. After I described Tri-CU’s arrangement to other small-credit-union CEOs, one CEO who was mid-examination asked to sit in so she could comfort volunteers unfamiliar with exam acronyms and so the volunteer could ask clarifying questions. The examiner became angry, said attendance was “not allowed” and “inappropriate,” and ultimately permitted the CEO into one volunteer interview while refusing the Supervisory Committee interview. The CEO dropped the issue rather than risk a worse exam report. That is not independence. That is field practice substituting a personal preference for the regulation.
-Doug Wadsworth
Yes sure. It’s unreasonable for a director that has a legal fiduciary duty of care to know acronyms like CECL, PCA, ROA, BSA / AML. The root here is director qualification, onboarding and training. There is a reason the NCUA has guidance on director qualifications. How about having directors up for the job, not reshaping the rules and making excuses for them when they aren’t?
Again anti-small credit union person, you fundamentally misunderstand, and since you are only in a big credit union bubble, you don’t even don’t know or understand what you don’t know or understand. At small credit unions our volunteers can’t hire out all the internal audits. Obviously our volunteers know those common terms (BSA, AML, CECL, etc.) , but when examiners start delving deeper into the laundry list of internal audits that credit unions manually conduct in house on a day to day basis, it quickly gets so confusing that nobody but a full time employee or paid auditor would be expected to understand. IE: Closed Account Audit, biennial account verification, annual line of credit audit, daily transaction audits, new account due diligence audits, daily ACH audit, daily “transactions over $3k” audit, etc. etc. You may not be familiar with these- because at a big CU you have entire departments that do them for you, or they are automated, and you have paid 3rd party auditors or paid accountants that audit that as well. You simply don’t understand the small community credit union ecosystem, and why would you? Go ahead, keep on with your chant of “one size fits all regulation” and “small CUs don’t deserve to survive” – and let’s see who destroys our movement.
-Doug Wadsworth
Didn’t say small credit unions didn’t they shouldn’t survive. I said they neither deserve nor should ask for special treatment on regulations, especially when there is fraud and failure, that were the direct result of a lack of governance, regulation or both.
As for survival, neither of us get to decide that, the market and competitive environment will (and no, not large CU competition). But it should mean something that when we position it that small credit unions are endangered unless they are balied out by lower compliance costs and fewer regs. Thats a pretty big signal. We’re already subsidized by the treasury, and we should ask for part of the industry to be subsidized by regulators , too. And, for that matter, that large credit unions have to subsidize credit unions within the industry. We pay for losses, advocacy, marketing, etc, etc, etc.
Every single credit union, large and small, had regulator horror stories. But we special rules for small credit union directors because they get their feelings hurt and need help with acronyms? Sure hope the bank lobby doesn’t read this. Their talking points for the next hill visit are being written word for word.
One last response to this anti-small credit union person (who hides comfortable behind anonymity). Although responding is fun! LOL.
You keep getting fired up about “special rules” for small credit unions. However, regulations have been compounding in number and complexity for the past 50 year. Most of these new regulations were designed for large institutions, while small ones get saddled regardless or relevance or applicability. It’s not like we are pulling special excuses out of thin air, but pushing back against many unreasonable new regulations or expectations that have arrived in recent years, but just don’t make sense for small ones.
I know of one particular giant credit union who was never actually a small credit union… but started out as a corporate credit union, maybe that is you (and that would explain your lack of understanding or empathy for the small community credit union ecosystem)?
Oh, and trying to silence small credit unions needs and priorities by trying to claim we will “break up the family” or “ruin the movement”… are you aware of the chilling resemblance to abuser/victim shaming? Like telling a kid to not report a parent that is neglecting or abusing them, or it will be their fault for breaking up the family? IE: If the tax exemption is at risk, if sure isn’t because of small credit unions, that’s for sure.
-Doug
What special products or services do big credit unions offer, that small ones don’t (other than business loans)?
you mean things like mortgages and credit cards?
I provide mortgages and credit cards, I know of *many* small credit unions who do.
Some data points. As of 3/2026, there were 2,466 credit unions with <=$100 million in assets. Of those, only:
*48% offer credit cards
*57% offer mortgages
*50% offer a home equity product
*13% offer business accounts
*17% offer their members point-of-sale auto financing (therefore making it less convenient)
*91% have 3 or less branches, while 45% have only 1 branch.
Data points are always helpful, but what is the TRUE issue at hand? It is about whether or not the small credit union returns *value* to members (especially underserved and minorities), in such a way to justify it’s existence. If they are failing to do so, then yes, they should merge. However, you don’t get to dictate what products or services they *should* have in order to define the value of that unique hyper local institution.
And, if they *are* valuable to their members and financially healthy (even if they don’t provide business loans or mortgages or whatever)… why shouldn’t they deserve right-sized regulations that make sense? Why are you so hell-bent on “one-size-fits-all” regulations? Is it to eliminate the small competitors? Just an urge to “cull the herd?” That’s not very cooperative, and not very “not for profit” sounding, is it? Of course, as you keep mentioning, you don’t believe this is a movement anyway.
-Doug Wadsworth
Who is dictating what? Where does that come from? Just data point, which suggests only slightly more than the majority of small credit unions offer core products to their members. The implication of that is that they are made to go somewhere else to have their product needs met. You might consider that one of drivers as to why small credit unions can’t grow. It doesn’t mean they don’t add value on the products they do offer.
I have never used the term one-size fits all. There is steady relief – you aren’t regulated by the CFPB, you don’t have to do capital planning and stress testing. They invented a CECL excel model for you. So small credit unions already
Compliance with all else – BSA /AML, KYC, TILA / RESPA, GAAP, HMDA (and so on, and so on) shouldn’t be asset size specific. Consumer protection doesn’t matter less to a member of a smaller credit union, and safety and soundness isn’t less important for a small credit union just because of their asset size. We can qualify it want relief for only healthy small cu’s, which makes sense. When do the most safe and sound large cu’s get regulatory relief the others don’t get?
You don’t address the systemic issue of small CU frauds and failures. The incidence of that is troubling. It’s not a systemic impact financially – even though large cu’s have to pay for it, but it’s an issue that can’t be chalked up to a few bad apples. Yet we lobby for more lax regulations. I’ve not heard any credible rationale that reconciles that.
Maybe it’s not about big v. Small cu’s – big ones already have far more regulations and cost. So legit questions, what right-sized regulations does a community bank your size get that you don’t get? What regulatory relief are you asking for or have gotten that they don’t get.
why do you deserve be regulated differently than a community bank your size?
Some data points. As of 3/2026, there were 2,466 credit unions with <=$100 million in assets. Of those, only:
*48% offer credit cards
*57% offer mortgages
*50% offer a home equity product
*13% offer business accounts
*17% offer their members point-of-sale auto financing (therefore making it less convenient)
*91% have 3 or less branches, while 45% have only 1 branch.
If a small credit union is unable to provide the products and services their members want or to give back value, then obviously that’s a problem, and they may need to merge. However, many small credit unions (outside of business services), provide pretty much all the same products and services that big CUs do. So, why are those small credit unions still struggling? Well, survey says that some of the biggest reasons are: Suffocating and growing Regulatory Burden and Competitive Pressure from other BIG credit unions. Awkward, I know. – Doug
Not akward in the least. You’re just kidding the point. If you can’t acquire the skills and resources to comply with regs, that should tell you something about the long-term viability of small credit unions. As for competition, well that’s an even louder signal about the viability questions. And, while I realize your small cu victim mentality requires you to blame large CU’s, I hope you realize that all of your member’ kids won’t even use fiat currency eventually, so you might also think about banks, fintechs, neo-banks, figure, sofi, and a plethora of PE backed entities getting bank charters.
You realize that even if the NCUA lays down for you and you solve this “suffocating regulatory burden” that it is nowhere near enough to sustain your viability, right? Not even close.
https://www.endangeredcudefense.org/tiny-but-mighty
Great points – small credit unions need a strong internal control structure, but it needs to be appropriate for their size – we need to stop overburdening small CUs. Supporting our Board and Supervisory Committee volunteers during exam as described does NOT weaken this structure.
I would agree it needs to be proportionate to their risk, meaning the CU’s risk in absolute terms, not the risk they represent to the system. Risk. Not size.