The Federation is also concerned about NCUA examiners penalizing so-called mainstream credit unions for accepting higher delinquency rates and write-offs that can come with serving lower income members. This is a topic which several meeting attendees brought to the surface, even though Hyland acknowledged changing policies would cause a little bit of pain to the agency, but that agency staff sincerely wanted to help, the Federation said.

"If we are going to serve the low-income community, we need to know that examiners are not going to see that as a negative and penalize our credit union," said Melissa Marquez, CEO of Genesee Co-op Federal Credit Union, headquartered in Rochester, N.Y., and chairman of the Federation's Governmental Affairs Committee, during the meeting.

Marquez related a conversation with one executive from a "mainstream" credit union who said that his credit union had not taken certain steps to reach out to lower income members and communities because it feared criticism and lower marks from an NCUA examiner for any higher delinquencies which might come from the practice.

Rafael Morales, the public affairs officer for the Federation, explained that what may be at play more are preconceptions and fears about lending to lower income members in that while lower income loan delinquencies might be higher, charge-offs among lower income borrowers are generally about the same as the industry's as a whole.

"The point is that credit unions both fear the possible delinquencies and fear what NCUA will say or do about them," Morales said. "The CAMEL 1 rating is a huge incentive to some of these credit unions and while they don't want to do anything that might endanger it, we are concerned that it's not telling the whole story when it comes to complete service."

Morales was echoing a point made during the meeting as well, that the NCUA's use of the CAMEL rating to measure risk to the insurance fund did not translate into a credit union which was doing a good job serving all its members, a point with which Hyland appeared to agree.

"The agency feels CAMEL needs to be amended slightly and should not be used as a means for determining how you meet your mission," the Federation quoted Hyland as saying. "CAMEL says only one thing: how risky you are to the insurance fund; and a CAMEL 1 may not be the best way to show how you serve your members."

Secondary capital and the agency's restrictions on its use was another hot topic at the meeting, the Federation said. By statute, low-income credit unions are allowed to use secondary capital that so-called mainstream credit unions are not allowed to use. However, the terms and use of the capital are left up to NCUA regulation and are a subsequent source of occasional friction.

"It seems NCUA doesn't like secondary capital," said Terri Portillo, CEO of the $1 million Women's Southwest Federal Credit Union, headquartered in Dallas, "but without [secondary capital] the credit union would be in trouble. It is a big benefit. We have a plan–but it's been more difficult with NCUA."

At the meeting Marquez also called on the agency to use a portion of its Community Development Revolving Loan Fund for secondary capital investments in CDCUs. "It would be a natural use of those funds," she told Hyland. "The Federation regularly shares risk with its members. We believe that it was Congress' intent for NCUA to be doing similarly with the revolving loan fund."

–[email protected]