At the Credit Union Enterprise Risk Management conference earlier thismonth, a senior official at the NCUA declared that the agency istaking a more qualitative approach rather than quantitative in itsexaminations. Tim Segerson, deputy director of the Office ofExamination and Insurance, acknowledged that credit unions thatdon't take a certain level of risk damage their income, making thema potential risk to the insurance fund. He explained that theNCUA's exam guide even instructs examiners to take a step back andlook at the bigger picture.

Unfortunately, that's not what we're hearing from credit unionson the ground but of course there's a bias there too. Turning aship as big as the NCUA is a tall task, and it's not going tohappen overnight. I know with our small staff at Credit UnionTimes, it is a feat to accomplish  the smallestthings sometimes, and, of course, you've experienced this in yourorganizations as well. People and organizations get set in theirways. But if the NCUA's upper management is consistent in itssteering and enforcement it will get there.

Support will have to come from on high as well. Board support ishelpful, but each director is only there for a maximimum of sixyears at a time. The new executive director of examinations will be holding therudder in this process. The person the board picks to lead theagency's career employees will have to have the diplomacy to workwith the revolving door at the board level, the courage to enforcethis way of thinking within the agency and a deep understanding ofthe credit union community. Given that many of the 25- and 30-yearveterans of the agency are gone, this person likely will bring avery different management style and history that will assist inthis new direction. In the end it will be to the benefit of theNCUA and credit unions to accomplish this.

In other NCUA news, the IG found nothing to substantiateaccusations by Commodore Perry FCU that their examiner was sexually harassingthe credit union's employees and subsequently lowered the creditunion's CAMEL rating when it was reported. The finding is notsurprising and in a he-she said situation like this, there won't becorroboration. Still the situation is sad and should be dealt withappropriately. An independent third-party review is needed.

The NCUA is in a bind because it can't discuss the exam findingsthat could legitimately support a lowered CAMEL score. TheSupervisory Review Committee that could review the case is alsowithin the NCUA, so the results will be suspect, particularly sincethe regional director who declined to send a different examiner tothe credit union, Herb Yolles, is the same one who made the retaliatory call fordual exams for all state- chartered credit unions in North Carolinaafter SECU was permitted by the state regulator to release itsstate CAMEL rating. He also accused N.C. regulator Jerrie Jay ofstating that the NCUA had begun terminating SECU's insurance, whichrecordings later proved she did not. However the IG yet again letan NCUA employee off with a free pass finding it was amisinterpretation.

As if exam issues aren't enough, credit unions are also facingheat from new competition–this time coming from a partnershipbetween Amex and Walmart. While some in the industry have said it'snot a real threat to banking relationships, it will be transformative. The sheerreach of those two companies coming together commands respect.

It also brings me to the next point in that it questions whethercredit unions are truly serving those of modest means. This was anissue that Keith Leggett, senior economist at the American BankersAssociation and author of the Credit Union Watch blog, raised theissue of whether credit unions are losing their soul during theCU Water Cooler Symposium last week. Of course, he's biased,but there's some truth to it. Plenty of credit unions work to notinclude members in the decision-making process. Annual meetings anddirectors' elections are not promoted at many credit unions andfield of membership loopholes make the common bond increasinglyless apparent. Credit unions must be solid in their banking skillsbut also rooted in being a credit union. Otherwise themember-ownership will become what Leggett called it: just a good PRline.

Finally, in the third of three conferences I attended in thelast two weeks, BAI Retail Delivery was a new one for me and a greatexperience. I saw some familiar credit union faces there, but thereshould certainly be more. The thought leadership and technology tohelp credit unions compete in a world where consumers can bypasstheir financial institution completely with an app was, well,priceless.