Responding to Critics, NCUA Amends Exam Process
Answering calls for an improved exam process, NCUA Chairman Debbie Matz on Tuesday released a letter to credit unions that details the agency’s plans to separate Documents of Resolution from Examiner’s Findings and include documented support for DORs.
Beginning in January 2014, DORs will include a description of material problems, along with corrective actions agreed upon by examiners and credit unions.
The Exam Fairness and Reform Act, reintroduced in the House of Representatives in April, would require examiners to document reasons for exam exceptions.
“Ideally, the DOR will include corrective action plans developed cooperatively between examiners and credit union officials for concerns of the highest priority,” Matz said in the letter, which is posted on the NCUA’s website.
Matz also said failure to correct problems documented in the DOR will impact a credit union’s CAMEL and risk ratings, and may also result in enforcement actions.
Examiner’s findings will include less urgent problems the credit union can address in its normal course of business, Matz said.
“Management may use its own discretion to determine the timeframe and approach for correcting these problems; however, we expect management to address concerns documented in the Examiner’s Findings within a reasonable timeframe,” she said.
Like unresolved DORs, unresolved Examiner’s Findings will impact CAMEL and risk ratings, she added.
The NCUA also revised its National Supervision Policy Manual to make clear that credit union management should recommend strategies to solve exam problems. Credit unions have said examiners have dictated how credit unions should resolve exam issues.
“Reasonable solutions provided by the credit union will become the corrective action plan included in the DOR,” Matz wrote in the letter. “Working together to proactively identify problems and reasonable solutions will ensure credit unions continue to serve their members and operate soundly.”
Other changes to the exam process detailed in the letter include a requirement for credit unions to contact their NCUA Regional Office in writing once credit unions correct activities deemed unsafe or unsound.
Examiners are also now required to follow up with credit union officials on outstanding DOR items within 120 days after the timeframe for completion has passed.