For another week, the dispute over the CAMEL rating disclosure involving the NCUA, the North CarolinaCredit Union Division and the $23 billion State Employees’ Credit Union of Raleigh, N.C., continued toroil the state’s CUs as managers expressed new frustration andanxiety over dual exams.

“This is all a tempest in a teapot, and we’re the teabag,” saidJoy Watts, president/CEO of the $78 million Carolina Postal CU ofCharlotte, N.C., one of 52 state-chartered CUs subjected tolengthy, unscheduled NCUA exams, some of which began Jan. 21.

The CU executives described an NCUA “blitzkrieg” of mostlyMidwest examiners fanning across the state to do the exams thatresulted from the NCUA-state regulator conflict. As one put it,this controversy “should have been resolved long ago by reasonableadults.”

Under its new policy, the NCUA sent examiners to thestate-chartered federally insured CUs because that SECU’s Septemberdisclosure of its CAMEL 2 score meant the agency could no longerrely on dual exams with state regulators.

In describing her experience, Watts, said a rotating group offive examiners spent seven days combing her credit union’s books,and for her “this was a first. We’ve never had a separate NCUAexam.”

The examiners “were courteous, helpful and tried to educate uson what they were doing,” but it created a great amount of stressand seemed unnecessary and a waste, said Watts.

Like others assured by the NCUA that the credit union had donenothing wrong, Watts said she was confident her own healthy CU hadnothing to hide. “But since we never had anything like this before,I was a little worried. And I kept asking the examiners if they gotall the information they needed.”

Watts, who is a director of the North Carolina Credit UnionLeague, which last week joined the negotiations to settle the dualexam dispute, said the extra exam will not cost the credit uniondirectly. However, the fees will come from the overhead transferportion of the stabilization expense. The examiners visitingCarolina Postal had told her a yearly visit would be a routine fromnow on, she said.

Watts called that a step toward undermining dual charters. Smallstate charters “may as well apply for a federal charter rather thango through this,” she said.

Echoing Watts on the unnecessary nature of the NCUA exams, JackBraswell, president/CEO of the $230 million Members CU ofWinston-Salem, N.C., called the NCUA move a knee-jerk reaction to asituation comparable to “parents fighting but ending up slappingthe children.”

He said three examiners were at his shop last week and found noapparent issues. Braswell said he understood the NCUA examiners hadbeen in the state for four weeks after being brought in from Ohioand Indiana.

Genice DeCorte, president/CEO of the $28 million GreensboroHealth Care CU, said the NCUA examiners were in her CU for twoweeks poring over the books, but why they did this is all verypuzzling.”

In a Feb. 6 letter to both Jerrie Jay, administrator of thestate’s Credit Union Division, and Herb Yolles, NCUA’s AtlantaRegional director, the North Carolina league pleaded for resolutionof the NCUA-SECU fracas. It also complained about the experiencesof “our state-chartered credit unions receiving conflictingguidance or no guidance at all on issues ranging from how to amenda Call Report to the sharing of state-federal exam findings.”

“Our credit unions will be faced with new conflicts throughoutthe year,” wrote John Radebaugh, president/CEO of the league. Headded, this “conflicting operational environment is a naturalconsequence of having two regulators that are not workingtogether.”

For her part, Jay, the top state regulator, stood her groundduring the week by telling the league’s Feb.1 town hall meetingthat she remains deeply troubled by the NCUA moves and she is stillawaiting the scheduling of a special resolution meeting involvingtop counsel representing her agency, the state attorney general andranking NCUA attorneys.

“I requested such a meeting last year and have not had aresponse to that request,” Jay told Credit UnionTimes.

CUNA urged the NCUA and state regulator to meet soon to resolvethe dispute. Saying that no credit union “should be disadvantagedby the actions of a regulator,” CUNA President/CEO Bill Cheney, ina Feb. 7 letter, asked NCUA Chairman Debbie Matz to have theagency’s staff meet with North Carolina regulators.

NCUA Chairman Debbie Matz said the agency had no choice but toend its joint exams with the North Carolina regulator because it“violated the trust,” by allowing State Employees’ CU to releaseits CAMEL rating.

“We apologize for any inconvenience as a result of our action,but the decision to allow the release of the CAMEL rating is aviolation of our policies and the sacred trust that existed,” Matzsaid during a virtual town hall meeting. “Once that trust wasviolated, we had no confidence in our relationship with theregulator. We cannot have a relationship with regulator who doesn’thonor our regulations.”

She said the state regulator could end the dispute by suspendingthe pilot program allowing State Employees’ CU to release its CAMELrating and order the credit union to remove the rating from itswebsite.

NCUA Executive Director David Marquis said the release ofratings has a chilling effect on the agency’s ability to resolveproblems at certain credit unions. Marquis said the additionalexaminations won’t lead to higher assessments because it is aroutine shifting of agency resources.

Credit unions can be forthcoming and disclose a great deal abouttheir financial condition rather than release their CAMELratings, said Bill Brooks, a former credit union CEO and NCUAexaminer.

“There are better ways to get information out to your members.Releasing the rating isn’t transparent, it’s stupid,” said Brooks,the former CEO of Government Printing Office FCU and LafayetteFCU.

However, he said the NCUA’s actions in response to the releaseof the CAMEL rating were excessive. “This issue is so blown out ofproportion that I am mortified by the regulators actions. It isregulatory chutzpah to suggest that their harsh action...isanything but retaliatory,” he added.

Meanwhile, remaining firm and vocal on the NCUA clash was JimBlaine, the president/CEO of State Employees’, who defended theCU’s CAMEL disclosure as arising from a long-held public policy onmember disclosure of financial data.