Ohio CU’s Examiner Claims Dismissed by OIG
An examiner assigned to the $32 million Commodore Perry FCU did not harass employees or retaliate against the Oak Harbor, Ohio-based credit union, the NCUA said Oct. 9.
“The [Office of Inspector General’s] investigation could not substantiate the allegation that a credit union examiner made inappropriate comments to Commodore Perry FCU staff, and/or behaved inappropriately at the Commodore Perry FCU during the examinations in 2011 and 2012,” said NCUA Public Affairs Specialist John Fairbanks. Fairbanks also said that the OIG investigation did not substantiate the credit union’s allegations of retaliation in the form of a lower CAMEL rating.
Commodore Perry FCU appealed the results of its examination conducted earlier this year, saying the examiner harassed and bullied its staff and then retaliated with a lower CAMEL score after the credit union complained to its supervisory examiner.
“I wish I could say that we are surprised that NCUA did not find itself guilty of any wrongdoing, but sadly we are not,” said President Thomas Renz. “It seems to me that if several witnesses tell the same story about specific instances of misconduct, then that should qualify as corroboration. But apparently the NCUA OIG, the same people that only a few weeks ago told the Senate Banking Committee that there are no problems with the appellate process, do not feel the same.”
The credit union executive added that he’s not familiar with the NCUA’s employee standards or policies, but “they’re lax enough that they determined there was no wrong doing, I have to wonder about those rules.”
Renz said the Inspector General’s office sent an employee to the credit union to investigate claims of inappropriate behavior and retaliation, and the investigator interviewed employees who alleged the examiner harassed and bullied them.
The credit union also provided the investigator with written statements by four female employees that were originally written at the request of the credit union’s management. The employees complained about the examiner’s inappropriate behavior within days of beginning his on-site examination in early 2011, Renz said. When the same examiner returned to the credit union in 2012 and exhibited the same behavior, the employees were asked to provide written statements regarding the alleged inappropriate incidents.
The OIG investigator was also provided with statements made by both Renz and CEO Michael Barr. Both said they also witnessed inappropriate behavior by the examiner. Renz said he and Barr had concerns about the examiner from the very beginning of the exam, after he initially introduced himself to them as “The Liquidator.”
“He was serious,” Renz said. “He said he was known in his years in the industry as ‘The Liquidator.’ I clearly remember that and took it as his point being, ‘don’t mess with me’.”
Renz added that the credit union still holds out hope that the NCUA’s Supervisory Review Committee will rule in its favor when it hears the credit union’s appeal sometime within the next 30 days. The credit union originally filed the SRC appeal Sept. 9, but Renz said the NCUA told Commodore Perry FCU on Oct. 9 that because it had requested further explanation regarding its denied exam appeal from its regional office, elevating the appeal to the Supervisory Review Committee was premature.
“We are not exactly certain why a request for clarification would delay that, but we hope to get this done as expeditiously as possible,” Renz said.
The credit union has already received the requested explanatory letter back from Region 3 Director Herb Yolles, but Renz declined to discuss its contents because it concerns subjects like the credit union’s CAMEL rating, which it can’t publicly disclose.
“I would be ecstatic to share some of what we’ve been given, but we’re prohibited by NCUA rules from sharing information about CAMEL scores and exams,” Renz said. “And frankly, we find that to be a serious issue because that means there’s no transparency in the process.”
The credit union is not satisfied with Yolles’ clarification, he said, so Commodore Perry reaffirmed its desire to elevate its appeal to the NCUA’s SRC. Renz said that letter was sent Oct. 9, prompting another 30-day wait-and-see period for the credit union and its officials. Renz added that the credit union included Yolles’ response letter with the request. The credit union has requested to appear in person for the appeal, but has not yet received an invitation to the NCUA’s Alexandria, Va., headquarters.
The appeal would be the fifth heard by the SRC in the past decade. None of the previous four were ruled in favor of the credit union.
Despite the credit union’s continued desire to have its exam appeal heard by the NCUA’s highest appeal authority, Renz said the credit union still hopes “the NCUA will come through and do the right thing.”
“All they need to do is recognize there are some issues with the appellate process and fix it,” he said. “We would be glad to work with them to repair the process.”
The credit union has been vocal in its support of S. 2160, the Financial Institutions Examination Fairness and Reform Act, which would replace the current appeals process with an Ombudsman position in the Federal Financial Institutions Examination Council. NCUA Chairman Debbie Matz is the FFIEC’s chairman. Exam reform, which also includes a companion bill in the House, H.R. 3461, would require NCUA examiners to cite authority when writing up credit unions for exam exceptions.
“If this does not demonstrate the need for reform, such as passage of the Examination Fairness Act, I am not certain what would,” Renz said of the credit union’s appeal experience so far.