Senate Banking Committee Chairman Tim Johnson is asking inspectors general of financial regulators to review whether examination procedures are hurting the ability of small financial institutions to do responsible lending.
Johnson (D-S.D.) wrote the inspectors general of the NCUA, the Treasury Department, the Federal Reserve and the FDIC that he had received complaints that financial regulators are “conducting examinations with unclear standards or with inconsistent application of agency policies and procedures.’’
He asked the inspectors general to audit their agencies to determine examination timetables and methods for ensuring the consistency of the examination process. He also asked the inspectors general to review the procedures for challenging examination results and “the frequency and success of such appeals.”
He wrote that credit unions and community banks say that “examination concerns create uncertainty in their business operations and hesitation to provide credit to their customers.’’
Johnson’s letter comes two weeks after the House Financial Services Committee held a hearing on legislation that would allow financial institutions to appeal their examination results to an administrative law judge.
The NCUA said the legislation would increase costs and threaten procedures to protect the safety and soundness of credit unions.