NASHVILLE, Tenn. — NCUA resources are being disproportionatelyapplied to small credit unions and skimping on large credit unionsupervision, NCUA Chairman Debbie Matz told NAFCU's annualconference attendees during her general session address July 24

As a result, effective Jan. 1, 2013, NCUA's Office of CorporateCredit Unions will reorganize into a new Office of NationalExaminations and Supervision that will supervise all corporates aswell as natural person credit unions with more than $10 billion inassets. 

Current Director of Corporate Credit Unions Scott Hunt will leadthe new office, Matz told Credit Union Times, and will bring hisexisting staff with him. The Office of Examination and Insurance,led by Director Larry Fazio, will provide twice-annual qualitycontrol reviews of the new office's examinations, she said.

In addition to the supervisory mismatch, the three largestcredit unions are each larger than the entire National Credit UnionShare Insurance Fund, which has $11.6 billion in assets as of May31. As a result, Matz said, if one of those credit unions “got intotrouble, we couldn't afford to rescue it.”

Natural personal credit unions that will be supervised by thenew office include the $48 billion Navy Federal Credit Union, the$25 billion State Employees' Credit Union, the $15 billion Pentagon Federal Credit Union and the $10.6 billion BoeingEmployees Credit Union. Matz said the $9.5 billion SchoolsFirst Federal Credit Union isclose to joining the other four credit union giants above the $10billion mark.

The move has been in the works for about two years, Matz said.The idea came out of a systemic risk working group that puttogether options to improve safety and soundness, which met withNCUA executives twice to make the final decision.

The new office is expected to be budget neutral.

“We wanted to find a solution that would be both efficient andeffective,” she said, adding, “we didn't want to add any additionalresources or staff.”

The reorganization was also prompted by the reduction in thenumber of corporate credit unions in the past few years, shesaid. 

Affected credit unions won't likely see any changes to theircurrent examination regimen until 2014, Matz said, because the NCUAwill spend 2013 making the internal transition and training staff.Director  Hunt, who has experience examining naturalperson credit unions, “brings so much” to the new office “becausehe has expertise on both sides” of retail and wholesale creditunions, Matz said.

Matz also announced that the NCUA will reconsider the $10million threshold that currently defines small credit unions, whichare exempt from many regulations and eligible for assistance fromthe Office of Small Credit Union Initiatives.

The regulator said in a recent letter to credit unions thatthose with fewer than $10 million in assets will from now on onlybe subjected to a 40-hour examination. Matz said if the smallcredit union threshold is raised, credit unions over $10 millionmay not get the 40-hour exam but will benefit from other regulatoryburden-busters.

The agency is currently conducting analysis to determine the newthreshold size and expects to roll out the recommendation in timefor the September board meeting, Matz said.

Regardless of whether more credit unions will fall under theOSCUI's umbrella, Matz said the office is working to reach a wideraudience by utilizing technology such as webinars, DVDs and phonecalls. The goal is to reduce the time examiners currently spendassisting small credit unions, which is partly to blame for thedisproportionate amount of resources spent on the small end of theasset spectrum.

During her address, Matz said the board will also reconsider anumber of regulations this fall that credit unions voicedobjections to during recent NCUA Listening Sessions. They includethe potential to count video teller machines as service facilitiesin meeting field of membership expansion requirements, dropping thepersonal guarantee for member business loans in certain cases,allowing credit unions to purchase Treasury Inflation ProtectedSecurities, increasing the maximum application fee for short-termloans and expanding the definition of districts for credit unionsthat serve rural areas.