An examiner assigned to the $32 million Commodore Perry FCU didnot 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 notsubstantiate the allegation that a credit union examiner made inappropriatecomments to Commodore Perry FCU staff, and/or behavedinappropriately at the Commodore Perry FCU during the examinationsin 2011 and 2012,” said NCUA Public Affairs Specialist JohnFairbanks. Fairbanks also said that the OIG investigation did notsubstantiate the credit union's allegations of retaliation in theform of a lower CAMEL rating.

Commodore Perry FCU appealed the results of its examinationconducted earlier this year, saying the examiner harassed andbullied its staff and then retaliated with a lower CAMEL scoreafter the credit union complained to its supervisory examiner.

“I wish I could say that we are surprised that NCUA did not finditself guilty of any wrongdoing, but sadly we are not,”said President Thomas Renz. “It seems to me that if severalwitnesses tell the same story about specific instances of misconduct, then that should qualify as corroboration. Butapparently the NCUA OIG, the same people that only a fewweeks ago told the Senate Banking Committee that there areno problems with the appellate process, do not feel thesame.”

The credit union executive added that he's not familiar with theNCUA's employee standards or policies, but “they're lax enough thatthey determined there was no wrong doing, I have to wonder aboutthose rules.”

Renz said the Inspector General's office sent an employee to thecredit union to investigate claims of inappropriate behavior andretaliation, and the investigator interviewed employees who allegedthe examiner harassed and bullied them.

The credit union also provided the investigator with writtenstatements by four female employees that were originally written atthe request of the credit union's management. The employeescomplained about the examiner's inappropriate behavior within daysof beginning his on-site examination in early 2011, Renz said. Whenthe same examiner returned to the credit union in 2012 andexhibited the same behavior, the employees were asked to providewritten statements regarding the alleged inappropriateincidents.

The OIG investigator was also provided with statements made byboth Renz and CEO Michael Barr. Both said they also witnessedinappropriate behavior by the examiner. Renz said he and Barr hadconcerns about the examiner from the very beginning of the exam,after he initially introduced himself to them as “TheLiquidator.”

“He was serious,” Renz said. “He said he was known in his yearsin the industry as 'The Liquidator.' I clearly remember that andtook it as his point being, 'don't mess with me'.”

Renz added that the credit union still holds out hope that theNCUA's Supervisory Review Committee will rule in its favor when ithears the credit union's appeal sometime within the next 30 days. The credit unionoriginally filed the SRC appeal Sept. 9, but Renz said the NCUAtold Commodore Perry FCU on Oct. 9 that because it had requestedfurther explanation regarding its denied exam appeal from its regional office, elevating theappeal to the Supervisory Review Committee was premature.

“We are not exactly certain why a request for clarificationwould delay that, but we hope to get this done as expeditiously aspossible,” Renz said.

The credit union has already received the requested explanatoryletter back from Region 3 Director Herb Yolles, but Renz declinedto discuss its contents because it concerns subjects like thecredit union's CAMEL rating, which it can't publicly disclose.

“I would be ecstatic to share some of what we've been given, butwe're prohibited by NCUA rules from sharing information about CAMELscores and exams,” Renz said. “And frankly, we find that to be a seriousissue because that means there's no transparency in theprocess.”

The credit union is not satisfied with Yolles' clarification, hesaid, so Commodore Perry reaffirmed its desire to elevate itsappeal to the NCUA's SRC. Renz said that letter was sent Oct. 9,prompting another 30-day wait-and-see period for the credit unionand its officials. Renz added that the credit union includedYolles' response letter with the request. The credit union hasrequested to appear in person for the appeal, but has not yetreceived an invitation to the NCUA's Alexandria, Va.,headquarters.

The appeal would be the fifth heard by the SRC in the pastdecade. None of the previous four were ruled in favor ofthe credit union.

Despite the credit union's continued desire to have its examappeal heard by the NCUA's highest appeal authority, Renz said thecredit union still hopes “the NCUA will come through and do theright thing.”

“All they need to do is recognize there are some issues with theappellate process and fix it,” he said. “We would be glad to workwith them to repair the process.”

The credit union has been vocal in its support of S. 2160,the FinancialInstitutions Examination Fairness and Reform Act, which wouldreplace the current appeals process with an Ombudsman position inthe Federal Financial Institutions Examination Council. NCUAChairman Debbie Matz is the FFIEC's chairman. Exam reform, which also includes a companion bill inthe House, H.R. 3461, would require NCUA examiners to citeauthority when writing up credit unions for exam exceptions.

“If this does not demonstrate the need for reform, such aspassage of the Examination Fairness Act, I am not certainwhat would,” Renz said of the credit union's appeal experience sofar.