In response to Sarah Snell Cooke's column in the June 23 issue ("Mutual Respect for Mutual Survival"), Cooke seems to opine that the problems at the NCUA are at the examiner level. I believe the examiner is merely the symptom and not the cause.
The NCUA has adopted an aggressive loss-control policy that goes all the way back to the CapCorp fiasco. Its actions in recent years indicate that it is better to get rid of a problem at any cost without regard to timing rather than work with credit unions for correction.
In recent months, I have received several requests to assist good credit unions, with good histories and good capital that are having temporary issues because of the economy. None are even remotely likely to cause a loss to the NCUSIF. Yet they are being subjected to very severe treatment that will cause them to take unnecessary actions or incur needless losses. The examiner is feeling real or perceived pressure from the agency to take whatever actions are necessary to fix the real or perceived problem.
NCUA pronouncements on transparency, flexibility and cooperation have all the clarity of a Senate hearing for a nominee to the Supreme Court. There needs to be better, simpler and more tangible guidance to examiners and credit unions.
I have confidence in examiners. I have little confidence on how they are directed.
It makes no sense to exact punishment on the remaining well-operated credit unions. Credit unions are and need to be innovative, creative and take normal risks to be successful. The NCUA needs to understand this and move on to the future. Managing risk should be the goal not eliminating it.
The NCUA, working with credit unions, also needs to focus on what will be other critical issues in the future. These include sources of funding for credit union growth, additional sources of capital and some form of risk-based NCUSIF premium or risk-based capital.
D. Michael Riley
D. Michael Riley & Associates