CUs Worry State Budget Shortfalls Could Affect Regulation
The budget shortfalls harshly affecting a number of state governments over the past two years seem, for the most part, to have spared credit union regulation any sharp impairment. But the issue remains high on the industry's radar for 2011.
Even in places like Arizona and Ohio, where examiner concerns were an issue earlier this year, conditions have improved with additional staff added.
"I'm not entirely sure why it happened, but the department has brought in an additional examiner. I was told it is because the department was saddled with regulating mortgage brokers, too," said Steve Dunham, former chairman of the Arizona Credit Union League in commenting on the status of the state's Credit Union Division.
The division, now under the state's new superintendent of banking and former banker, Lauren W. Kingry, previously had two examiners supervising 22 CUs in a state reeling from a depressed economy and real estate collapse. The state's Republican governor, Jan Brewer, has vowed to make drastic cuts because of a fiscal 2011 budget crisis.
In California, however, also under a dire budget squeeze, the Financial Institutions Division said so far it has not experienced any reductions, and "in fact, we added three limited-term credit union examiner positions, which we expect to be made permanent in two years," said a spokeswoman.
"We currently have 42 credit union examiner positions with 10 as supervisor-managers," she said added. "We do not plan to eliminate any positions in 2011. However, we do have two vacancies we will fill once the state hiring freeze is lifted."
In Ohio, meanwhile, the state's Banks and Savings Institutions Section is in the process of filling vacancies, said a spokesman. He noted also that the CU section now has more field examiners now-13, including two supervisors-than in the past five years.
Most recently, the division promoted Michael Wettrich to deputy superintendent for credit unions after serving 11 months in an acting capacity, but a spokesman said the delay was not tied to budget concerns.
In North Carolina there has been some worry Gov. Beverly Perdue, who earlier this month proposed consolidating 14 high-level departments and functions into eight next year, might include the Credit Union Division joining the Commissioner of Banking office into a single unit.
In an advisory to its members, the North Carolina Credit Union League said the governor's proposal, due for action by the legislature in February, retains the CU division as independent. In the meantime, league staff will continue discuss with both the legislative and executive branches the consolidation. The CU Division regulates 52 state-chartered CUs.
"We are concerned that the orientation of a combined regulatory agency would erode the individuality of credit unions as member-focused institutions and maintain that statewide consolidation efforts should exclude the Credit Union Division," said Lauren Whaley, director of legislative and regulatory affairs for the league.
Jerrie K. Jay, the state's chief CU regulator who holds the title of administrator, said based on her conversations with other members of the Perdue administration, the consolidation focus has been on other departments and not on financial regulation.
But as an aside, while North Carolina CUs are in good generally shape "all those NCUA assessments are really hurting small credit unions, and I don't know what we are going to do about but I think it is vital we get secondary capital powers," said Jay.
Regarding Arizona conditions, Dunham, the former league chairman and president/CEO of the $165 million Canyon State CU of Phoenix, said earlier this year he found it troubling that the state had just two examiners. For the longer term, "this is not a particularly desirable condition," said Dunham.