The job duties of an NCUA examiner have some similarities tothose of Credit Union Times reporters.

We spend a lot of time combing through financials, looking foranomalies.

Casual discussions among credit union executives usually stopwhen we walk into the room.

And, at times, our jobs can be dangerous.

However, I've never experienced the terror NCUA examiners whoseized the $23.6 million Taupa Lithuanian Credit Union must havefelt when they discovered 10,000 rounds of ammunition and severalsemi-automatic weapons stashed in store room. Fugitive CEO AlexSpirikaitis, who stands accused of embezzling as much as $10million from the failed institution, had also hidden a go bagfilled with a change of clothes, fake IDs and cash.

It's assumed Spirikaitis was merely stashing the items at thecredit union, and did not intend the bullets for NCUAemployees.

However, that is just an assumption.

We can also assume that take over branch robbers don't intend toshoot employees. However, sometimes they do.

It gives a whole new meaning to employee safety for the NCUA.It's my understanding police officers do not accompany examinerswhen they seize credit unions. If I were an examiner, I'd want thatpolicy revised. I'd imagine the liability insurance firm thatcovers employees would agree.

Credit Union Times will investigate this question over the nextweek, so stay tuned for a story on the topic.

We are also following up on two recent developments on the taxreform front: statements by Canadian credit union executives at theCU Watercooler Symposium in Nashville that American credit unionsare wasting their time and resources fighting to maintain thecredit union tax exemption; and, a story in Politico that focusedon the efforts by the banking lobby to eliminate the tax break.

Does the tax exemption, as the Canadian executives said,diminish credit union influence among lawmakers? And would thepresumed lifting of the member business lending cap and otherregulatory restrictions credit unions would receive in exchange fortaxation enable them to recover the cost of their tax bill?

Reaction is mixed. Some credit unions tell us taxation would beworth it. However, others say there is no way they could recovertaxes with increased business lending volume and looser membershipeligibility standards.

Over the next week, we will examine credit union financialreports to determine whether or not that is the case. I have ahunch it will depend upon individual credit union product andservice mixes. Obviously, a credit union that already has a robustmember business lending program will be more likely to benefit fromthe lifting of the MBL cap. Likewise, a SEG-based credit unionwould stand to gain more from open membership rules compared to acredit union that has had a community charter for some time.

Another topic we are investigating at Credit UnionTimes is something I call the fraud tipping point. Sometimeover the past two years, the number of credit unions that faileddue to loan losses or other credit risks has been exceeded byfraud-driven failures. In some cases, the amount stolen is equal toor even exceeds the credit union's total asset size, which blows mymind.

Despite these cases, the NCUA has decreased the amount of timeit spends on-site at small credit unions. The rationale is thatsmall institutions present much less of a threat to the shareinsurance fund than large one. From an insurer's standpoint, thatmakes sense.

However, I don't think the NCUA is considering the chillingeffect reputation risk could have on the industry. When a creditunion fails due to fraud, it leaves behind a field of membershipwhose trust in credit unions has been rocked. And, it results inlocal news headlines that include the words credit union and fraud,which to me, seems like a public relations nightmare for othercooperatives in the market.

To the NCUA's credit, as we reported in this issue (FraudFuels Reputation Risk), the regulator is working onstrengthening exam procedures and approaches to improve detectionof fraud risk indicators. Those new procedures are expected to berolled out next year, the NCUA said.

We will also report ways credit unions and = volunteers canmanage the fraud risk.

As always, if you have any comments, I'm all ears. Please drop me a line.