"NCUA is very aware of the distinct qualities inherent in credit unions that primarily serve consumers in low- and moderate-income areas," commented NCUA Chairman Debbie Matz when releasing the guidance. "This is a reasoned, flexible and sensible regulatory approach, and it can have a real and positive impact in distressed communities, she added."

Rosenthal drew some encouragement by the fact that the agency deliberately put the document in front of examiners. He observed that the agency's last efforts in this area? an "examiner guidance white paper" entitled "Supervising Community Development Credit Unions: Balancing Their Mission and NCUA's Regulatory Responsibilities," never appeared to have much of an impact after the agency distributed it in 2005.

"We have members who have told us of examiners who told them they never saw or read that white paper," Rosenthal said. "Issuing it as guidance to examiners carries more impact than a letter to credit unions."

CDCUs have long chafed under what they have complained has been a one-size-fits-all attitude from NCUA examiners who, too often they say, would compare their numbers and operations to credit unions that were not dedicated to low-income and community development. Rosenthal explained that these examinations have both created unnecessary friction between CDCUs and the agency and has needlessly hampered CDCU operations and work.

This new document, if it is widely taken up, could help ease that friction and improve CDCU operations, Rosenthal said.

Rosenthal pointed to certain areas of the document where he said NCUA had come to agree with CDCUs. On page five of the new document, the agency noted that the different fields of membership that CDCUs and low-income credit unions have mean that their delinquency and operating costs tend to be different.

"Moreover, examiners should recognize that LICUs and CDCUs systematically show higher operating costs than other credit unions because of the nature of the field of membership they serve," the agency wrote. "Similarly, delinquency rates at LICUs and CDCUs, while often higher than other credit unions, do not automatically translate proportionally into charge-offs."

In another section, NCUA noted that CDCUs often have to use nontraditional underwriting to offer their members the sorts of loans they most often need, and these methods often include things like accepting explanations for limited, negative or lack of credit history, requiring payroll deduction for loan payments, and documenting history of making timely payment that are not usually counted on credit scores using qualified co-signers.

In still another section, a chart offers different scenarios for changing financial ratios at a CDCU and offers examiners some questions they should consider when evaluating the development. For example, if a CDCU's operating expenses rise in proportion to its gross income, the examiner should ask if the CDCU has a program in place that is funded with grant money. Such a program could make the CDCU's expenses seem high while actually offsetting them.

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