The Federal Reserve Bank of San Francisco's 2011 Annual Reportfeatured an essay written by the bank's president/CEO, John C.Williams. The essay, titled Opening the Temple, focused on theFed's gradual move to greater transparency.

As I read the essay, one particular paragraph struck a chord. Ina section called “Financial Stability,” Mr. Williams makes thefollowing statement: “…the Fed has become more open regarding itsassessments of the financial health of the largest banks in thecountry. Traditionally, all supervisory information about banks waskept secret. … In early 2009, the Fed, working with otherregulatory agencies, published the results of the first stresstests of the largest banks. These tests gave the public a betterunderstanding of the financial health of each of the largest banks,reducing uncertainty and fear. In March of this year, the FederalReserve publicly released the results of its latest stress tests ofthe largest banks. Publication of the stress test results hasproven to strengthen public confidence in the banking system.”

As I read these words, I could not help but consider the recentback-and-forth between the National Credit Union Administration,State Employees' Credit Union of North Carolina, the North Carolinastate regulator, and in general all North Carolina state-charteredcredit unions over SECU's release of its CAMEL score.

While the Federal Reserve works to facilitate and highlightgreater openness and access to information, the NCUA seems boundand determined to head in the other direction. I know a number ofpeople who work at the NCUA. There are very good people trying todo the best job they can serving our industry. The problem,however, is that the institution's policies they are tasked withcarrying out facilitate not openness and transparency, butisolation and opacity.

It is time for the NCUA to follow the Fed's lead and embrace ageneral policy of transparency, in particular with regard to thesharing of information pertaining to credit union health –including CAMEL scores and other metrics used by examiners to gaugeinstitutional performance and compliance. If this occurs, even ifonly at the level of billion-dollar plus credit unions, I believewe will see in the credit union community what Mr. Williams'scomments suggest has happened in the banking sector: a strengthenedpublic confidence in the credit union community.

Recent commentary from the NCUA suggests that the release ofsuch data would undermine public confidence, inspiring panic in thegeneral public and elevated risk to the share insurance fund. Ithink we might see some panic, but not in the general public.Rather, I believe we would see panic in the executive offices ofunderperforming credit unions. Under-performing credit unions wouldbe forced to define and execute better strategy, strategy with moreintelligent risk mitigation and contingency planning than what somecredit unions have engaged in in past years. Nothing like thethreat of airing dirty laundry to move people to clean up theiract.

While better planning at credit unions would be a valuableoutcome of transparency, the better outcome would be one ofmore-consistent, rules-based exams and disciplinary actions.Stories abound from credit union leaders of examinationinconsistency from exam to exam and from institution toinstitution. The same threat of public disclosure that would serveto prompt credit unions to adopt better leadership discipline wouldalso serve to prompt consistency in the assessment of credit unioncompliance.

In the section following his commentary on the public goodserved by releasing bank stress test results, Williams touches ongovernance at the Fed. He says, “Accountability and openness cannotjust be about the policy decisions we make. They must also be abouthow we operate as an organization.”

I believe the NCUA has made strides with regard to the firstsentence. It is the second sentence that causes concern. Fromvarious agency speeches, listening tours and the like, we see theNCUA trying to make decisions based on accountability and openness.Until that philosophy governs the agency's operations, however, itis just empty rhetoric.

The Fed began its march to transparency 18 years ago with itsfirst release of a statement regarding FOMC policy decisions. Thepath to transparency has been slow, and as Williams adds, notalways voluntary — but it remains a path worth taking if for noother reason than that we are in the information age. Informationis destined to be free and in the public domain, often without theconsent of those who hold that information.

Far better for the Fed, and the NCUA, to recognize the shift andwork to define not if, but how to share the results of the public'sdata.

Tom GlattJr. is a credit union consultant in Wilmington, N.C.