It may as well have been called the "Larry Fazio Show," as many questions as the director of the NCUA’s office of examination and insurance fielded during the regulator’s Virtual Town Hall online broadcast Thursday.
Although the event prompted questions in several areas, from emergency liquidity to the recent legal decision to allow credit unions to change field of membership charters in order to merge, it was Fazio who fielded questions about exams, which was the most popular topic of the afternoon.
NCUA Chairman Debbie Matz opened the online broadcast with a 30-minute review of recent rules, achievements and changes generated by the regulator this year, and after introducing 12 senior staff members, opened the town hall up to questions from the virtual audience.
One credit union asked if a document of resolution can be issued without management being allowed an opportunity to discuss it. Fazio said by definition, a DOR is a record of agreement between the examiner and credit union regarding how a problem will be remedied. As such, the examiner and credit union management should have discussed the DOR issue during the exam process.
“A DOR should not be a surprise to management during a joint conference,” Fazio said.
Another credit union asked Fazio to clarify the difference between a DOR and an exam finding. Fazio said the agency is working on clarifying that as well.
“A DOR is either an existing or potential material threat to the viability to the credit union, either financially or operationally,” he said. The NCUA is working out the details of that definition, particularly the determination of what constitutes a material threat.
Fazio added that one exception to that DOR definition is the Bank Secrecy Act. The NCUA has made an agreement with “another agency” that any BSA violation is elevated to a DOR.
A credit union reported that their examiner used to provide a draft of the exam report prior to the exit meeting, but doesn’t anymore. Fazio said examiners aren’t required to provide the draft, but customarily does leave one by the time the examiner conducts the joint conference with the board. However, credit unions should be provided with a draft of a DOR by the examiner’s last day on site, when the exit meeting takes place.
The exam appeals process came up, with a credit union asking how the agency’s zero tolerance policy against retaliation works. Executive Director David Marquis fielded the question, and said if the NCUA receives “any type of information related to (retaliation)” several layers of review are in place. Credit union complaints about retaliation are usually received by the supervisor examiner, who then elevates the issue to the regional director.
Depending up on the nature of the complaint, the regional director may forward it to the Office of Inspector General. If the complaint is an exam issue, it oftentimes goes to the Supervisory Review Committee, Marquis said.
Other questions asked during the town hall concerned the potential regulatory relief credit unions between $10 million and $30 million might receive if the proposed rule to increase the small credit union threshold is finalized; clarifications regarding the proposed emergency liquidity rule; and, questions about share insurance fund premiums and corporate stabilization assessments.