NCUA Disfavors Small CUs, Claims NACUC Head
NCUA has a bias against small credit unions, according to the chairman of the National Association of Credit Union Chairmen.
The discrimination against CUs under $500 million is showing up repeatedly on agency exams as demands increase for higher loan allowances on the balance sheet, contends John Steck, chairman of the $160 million Utah Central CU of Salt Lake City.
The NACUC head argues that larger institutions fare better in ALL procedures as "there's a new crop of young auditors now who are demanding perfectly well-performing credit unions have to increase allowances," a development that depletes capital and puts CUs in a precarious position.
"I think there is a feeling that the smaller credit unions are simply unable to support the insurance fund to help bailout the corporates," Steck said. "NCUA doesn't want credit unions under $500 million."
Steck made his comments in connection with his CU's participation in various training programs underway this month in advance of NCUA's Jan. 27 financial literacy rules for directors.
Asked for comment on Steck's complaint, a spokesman for NCUA Chairman Deborah Matz said the agency's responsibility remains to protect the safety and soundness "of the entire credit union system. Regardless of a credit union's size, NCUA subjects all federally insured credit unions to the same rigorous examination and supervisory standards. This policy is particularly important given the difficult economic climate that credit unions face, and we will continue to fulfill our responsibilities accordingly."
Steck said he has no quarrel for the need to upgrade director training in the industry but questions NCUA's motives in a campaign which appears to lead small CUs into community bank conversions.
Steck said the "frustration levels" of small CUs remain very high as they try to cope with an avalanche of new regulations and the assessments.
Overall, he concluded, "NCUA is making strides in eliminating small credit unions."