KENNEWICK, Wash.–Citing specific examples of what they described as crushing regulatory burden and wasted time and money, a group of smaller credit unions has sent a list of proposals for regulatory relief to NCUA after the agency asked for feedback on its strategic plan.
The letter was sent by the Endangered Credit Union Defense (ECUD), which, as the CU Daily first reported here and here, was formed by Doug Wadsworth, CEO of the $73.8-million Tri-Cities Communities Credit Union in Kennewick, Wash.
Wadsworth met at NCUA’s headquarters in Alexandria, Va. with Chairman Kyle Hauptman during the same week the agency hosted a virtual town hall.
‘Getting Drowned Out’
“Sometimes we feel that the voices of small credit unions are getting ‘drowned out’ at our trade associations and leagues,” Wadsworth told The CU Daily. “When the NCUA asks specifically what small CUs need, are they just getting vague generalities from them? Do our trade associations or leagues understand what our unique small CU needs actually are? Will anyone be specific?”
The 17-page letter gets specific. It includes the dozen requested reforms on everything from the number of examiners sent on-site and how often they visit, to unnecessary analysis, to pressure on board members and supervisory committees. Each of the points raised in the letter also includes the benefit of the requested reform to both the small credit union and NCUA, along with examples and paragraph-long comments from both identified and “anonymous CEOs” sharing personal stories of time-consuming demands that are part of the exam process and which they say have little to no bearing on anything.
The CU Reformations
The requested Reforms include:
Reduce Examination Burden
“Reduce the examination frequency and examiner staffing level at high-performing small credit unions (under $500 million in assets, CAMEL 1 or 2). We propose only single NCUA examiner be scheduled very two years for healthy small credit unions.”
One CEO commented, “…For myself, every 15 months two examiners show up and stay on-site for an entire two weeks, plus multiple additional wees of asking for information …This compliance burden drains limited critical resources from our small CU.”
Stop Duplicating State DFI Examinations
“We request that the NCUA rely solely on state Department of Financial Institutions (DFI) examination results for small, low-risk, state-chartered federally insured credit unions with assets under $500 million, rather than conducting joint or duplicative examinations.”
The letter notes that some small CUs have had five-to-nine examiners on-site simultaneously.
End Punitive and Irrelevant Documents of Resolution
“Limit DOR issuance on small credit unions under $500 million to serious findings that present urgent and significant risk to safety and soundness (particularly for repeat findings, or if the CEO can’t be trusted to fix them). Stop considering any BSA-related clerical errors as automatically necessitating a full DOR.”
Exempt Small CUs from ALM Rate Shock/NEV Analysis
“We propose NCUA accept the simple ‘GAP analysis’ in-house method for small credit unions under $250 million, rather than the expensive and complex ALM/IRR/NEV analysis.”
Noted Wadsworth in the letter, “My $73-million credit union (in a single office with only 14 employees) pays nearly $12,000 each year for these complex (analyses), despite a simple balance sheet of only three-year maximum-term bank CD investments and standard loans. For smaller or struggling credit unions, this staggering expense could represent half their annual net income despite the fact it provides little or no value to our simple CUs.”
Reduce Unrealistic Supervisory Committee Expectations
“We appeal for relaxation of Part 815 guidance to limit Supervisory Volunteer duties and expectations of small credit unions (under $500 million) to essentials (e.g., periodic cash counts and audit reviews).”
Said one anonymous CEO in the letter, “They (NCUA) have been especially critical of all my volunteers. I lost one board member and almost another SC because the expectations are high and these volunteers feel in over-their-heads, so to speak.”
Examiner & Volunteer Interviews Allow CEO Presence
“If requested by Supervisory volunteers or board members, CEO presence should be allowed in examiner interviews. Examiners can give their phone to the volunteer to ensure they are available privately later if there are any concerns which need to be discussed without the CEO (without his knowledge).”
Reduce Examiner ‘Over-Compliance’ Pressure
“We implore NCUA to issue guidance directing examiners to prioritize safety/soundness regulations for small credit unions, allowing flexible, in-house compliance solutions to be acceptable for lower-risk areas and de-emphasizing low-importance regulatory compliance (not push outsourcing as the solution).
Exempt Small Credit Unions from CECL (Completely)
“Exempt small credit unions under $500M in assets from complying with CECL, completely.”
The letter states that each member CU of ECUD agrees “we are spending so much time and money on complying with CECL, while it provides zero benefit to our credit union or any impact on our safety and soundness.”
NACHA Audit Exemption Request
“Exempt small credit unions (under $500 million) from conducting the annual NACHA audit.
Bond Renewal Board Signatures
“Exempt small credit unions from the complex new bond renewal procedures and signature requirements.”
The letter states, “Many years ago, apparently, one credit union somewhere doctored their bond insurance renewal documents, so their credit union wasn’t adequately insured and there was a loss…A few years ago NCUA decided to complicate the regulation and developed a new series of new regulatory hoops we have to jump through…However, despite the regulations being 100 times more complicated and burdensome now, it is just as infective in reducing the risk of a loss!”
Remove the Biennial Account Verification Requirement
“Stop requiring small credit unions from complying with this obsolete and redundant regulation (that) just causes more work, more findings and even DORs.”
The Signatories
Members of ECUD who signed the letter include:
- Granco FCU
- Mint Valley FCU
- Nordstrom FCU
- Tri-CU FCU
- Connection CU
- Spokane Media FCU
- Spokane City CU
- Evergreendirect CU
- United Trades FCU
- Spokane City CU
- Prime Source CU
- IBEW 76 FCU
- Milestones FCU
- Good Neighbors FCU
Smaller credit unions interested in ECUD can contact Doug Wadsworth at [email protected].
2 Responses
Doug, is there any way I could get that photo for my personal use? The small credit union air balloon is soooooo adorable!! I’d just like to use it as my facebook cover photo…….not sure where the image is from but I lived it, and the article!
the photo was provided by The CUDaily, it is great, isn’t it?! Email the editor, Frank for a copy?
-Doug Wadsworth
http://www.endangeredCUdefense.org