A bill that would provide an appeals process for financial institutions dissatisfied with the results of their examinations is a “firm step in the right direction’’ towards reforming the “inconsistency and sometimes heavy-handedness of the examination process,’’ CUNA President/CEO Bill Cheney said in a letter to lawmakers.
The measure has 66 co-sponsors in the 435-member House of Representatives. No companion bill has been introduced in the Senate. Its main sponsors are Rep. Shelley Moore Capito (R-W.Va.), the chairman of the subcommittee with primary jurisdiction over credit union issues, and Rep. Carolyn Maloney (D-N.Y.), the panel’s ranking Democrat.
The NCUA hasn’t taken a position on the measure.
Under the bill, a financial institution that is unhappy with the results of its examination would have the right to appeal it to an administrative law judge who would submit his or her findings to the ombudsman of the Federal Financial Institutions Examination Council, which is made up of representatives of federal and state regulatory entities.
NCUA Chairman Debbie Matz is the council’s current chairman.
The bill requires federal financial regulators to produce examination reports within 60 days of an examination’s completion. In addition, if the financial institution wants it, the agency must include an appendix to the report listing all the facts that were used as a basis for the conclusions.
Cheney noted that because the NCUA already meets or beats the 60-day deadline in most cases, the lawmakers should change the language to ensure that regulators with a history of timely completion of exams don’t take longer. He also suggested that bill direct the FFIEC’s ombudsman to design and implement an evaluation form of the examination process that financial institutions can fill out voluntarily.
Cheney also recommended that lawmakers direct the ombudsman to follow up with financial institutions that have appealed their examinations or lodged other complaints to ensure that there has been no retaliation against them by their regulator.
In addition, Cheney wrote, the provision in the bill mandating the ombudsman review examination procedures for “consistency’’ could be problematic because it might prevent the NCUA from establishing procedures that take into account the unique characteristics of credit unions.