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	NAFCU witness Jeanne Kucey said the current exam process places CUs at a disadvantage. – Tkatch photo

Feb. 2, 2012 – NAFCU supports H.R. 3461 as a tool to help improve transparency and provide much-needed consistency in examinations of credit unions, JetStream FCU President and CEO Jeanne Kucey, a NAFCU Board member, told lawmakers Wednesday.

Kucey was testifying on H.R. 3461, the Financial Institutions Examination Fairness and Reform Act, during a hearing of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit. The measure, which has 81 cosponsors and broad bipartisan support, is intended to make financial institution examinations more consistent and to establish another path for institutions to appeal supervisory actions. The bill was introduced by Reps. Shelley Moore Capito, R-W.Va., and Carolyn Maloney, D-N.Y., the subcommittee's chairman and ranking member.

In her testimony, Kucey said there are inconsistencies in examinations today. "Regulatory agencies in Washington try to interpret the will of Congress, examiners in the field try to interpret the will of their agency, and financial institutions often become caught in the middle," she explained to lawmakers.

She also said there are flaws in the current process for appealing supervisory decisions. Without an independent third party to review appeals, NCUA serves as the prosecutor, judge and jury during the process, she said.

During the question-and-answer portion of the hearing, Kucey noted that if a credit union CEO has a contentious relationship with the examiner, the fear of retaliation alone is enough to prevent the official from filing an appeal of a supervisory decision.

Wednesday's hearing began with testimony from regulators, including NCUA Executive Director David Marquis. Marquis told lawmakers that H.R. 3461 could bring unintended consequences, including a one-size-fits-all examination standard that robs examiners of flexibility. But Rep. Don Manzullo, R-Ill., questioned the notion that standards should not be consistent. He quoted a portion of Kucey's testimony, stating, "Notwithstanding changes in regulation, the standards by which a credit union is evaluated during examinations should not change from examination to examination."

Manzullo also urged Marquis and banking agency witnesses to remain in the hearing room when the discussion turned to the views of industry representatives.

NAFCU white paper on exams available to all CUs

NAFCU has worked to help ease the communications process during credit union examinations with a white paper, "Managing Examinations in Challenging Times," targeted to credit unions. The paper, highlighted by Kucey during Wednesday's hearing, provides credit unions tips on how to discuss issues that may arise during the examination process with their examiners.

The paper was first published in 2010 and has since been updated to reflect the current examination environment for credit unions. It includes links to the NCUA Examiner's Guide, the agency's interpretive ruling and policy statement on filing an appeal to challenge agency rulings and other useful information.

The white paper is a NAFCU compliance-related resource and is available for all credit unions to download.

More from:

• NAFCU press release