The fact that only four credit unions have elevated an exam appeal to the NCUA’s supervisory review committee in the past 10 years is a sign the exam system is working, Executive Director David Marquis told Credit Union Times.
The subject of many exam appeals–CAMEL coding–is a disagreement that involves non-public information, Marquis said, so credit unions aren’t likely to elevate the dispute to the SRC level.
And, Marquis said the fact that no credit unions have won an appeal at the SRC level, and only 27% of credit unions win appeals at the regional level, means examiners are “getting it right.”
“We would hope that most of the time our examiners do get it right,” he said. “If they aren’t getting it right, we have a different issue to deal with.”
Marquis said credit unions haven’t said a lack of successful victories has discouraged them from the appeals process; rather examiner retribution is cited as the most common reason.
NAFCU President/CEO Fred Becker disagreed, saying a lack of credit union appeals victories “has a very chilling effect” on the process.
“The fact that there have been only four (SRC) appeals in 10 years would indicate to me that there is a tendency not to appeal, that credit unions think it’s a waste of time, and the presumption is for the NCUA to favor the examiners, so why bother,” Becker said. “There are 8,000 credit unions, and it’s hard to believe that over 10 years there have only been four appeals and not once has the NCUA ever been wrong.”
Becker said he’s observed in his experience in government that government agencies tend to support their employees and findings, particularly in public. This tendency is not unique to the NCUA, he added.
Marquis said the NCUA has heard general reports from trade associations about retaliation, but when pressed for specifics, they aren’t provided. So, the agency is left not knowing if retaliation reports are real or hypothetical, he said.
Becker countered that specific retribution information is not provided because credit unions fear more retribution. Citing a lack of specifics is a way for the agency to avoid the problem, he said.
However, Marquis said the agency takes the subject of retaliation very seriously.
“(Retribution) has happened on one or two occasions, and we come down extremely hard on examiners when they do that,” Marquis said. “That sort of heavy handedness gives us a bad reputation we do not want out there.”
Not only does the NCUA have a very strict anti-retribution policy, Marquis said there is very little an examiner can do to get even with a credit union.
“They just don’t have that kind of power,” he said.
Any time an examiner issues a document of resolution, letter of understanding or a letter to the regional director regarding an exam issue it must be approved by the regional office.
“It has to be fact specific, a real issue, not a made-up one to get even with a credit union,” he said.