Anthony Demangone, NAFCU's director of regulatory compliance, stressed that the association did not draft the document to throw stones or point fingers at anyone but instead to help credit unions have a better relationship with their regulator and to know how to improve what might be a difficult situation.

"This document is designed to highlight how credit unions may challenge actions or findings made by NCUA examination staff," the NAFCU paper said. "In addition, it will discuss issues that credit unions may wish to consider when 'managing' the supervision and examination process."

Although NAFCU sent the document to its member credit unions first, Demangone stressed that the association had drafted it with all credit unions in mind and with the goal of helping all credit unions improve their examination experiences.

The issue has come to a higher prominence since NCUA Chairman Debbie Matz said in February that the agency was very concerned about credit unions' financial health and that the agency was asking examiners to be more diligent.

In July, the "Safety and Soundness Report" said that 75% of federal and state-chartered credit unions in the U.S. are operating under some sort of administrative or corrective letter. The publication reported that it arrived at its statistic after analyzing NCUA data acquired through a Freedom of Information Act request.

CUNA did not indicate the timetable it had for gathering data from the survey.

NAFCU's document sought to both alert credit unions about what they could do if they begin to experience difficulty or a dispute with their examiner.

"NCUA's more aggressive stance very likely has led to inconsistent examinations. NCUA, like any organization, acts through its employees and agents," the document noted. "No matter how much training is received, employees will react differently to the same situation. Some employees are more seasoned and will be better prepared than others. Mistakes will be made by examiners and credit unions; neither is immune from this phenomenon. It is no surprise that there are increasing occasions when a credit union and the NCUA examiner do not see eye-to-eye."

Confronted with a situation like this, NAFCU's document advised credit unions to first decide whether to contest the examiner's decision or judgment at all.

"Challenging an examination takes time, effort and occasionally a good deal of money," NAFCU wrote. "Many credit union executives have indicated to NAFCU that they 'pick their battles' carefully, avoiding a costly confrontation except in the most extreme and unusual circumstances. If a finding is minor and can be corrected quickly, many credit unions will make the suggested change even though they may disagree with the examiner's logic."

If the CU decides that it has to contest or dispute something in an exam report, NAFCU recommended that it first open a discussion informally with the examiner.

"To maximize their chances of success at this level, NAFCU members have indicated to us that a credit union should communicate the rationale for its position clearly and without emotion. In addition, should attempts to resolve the matter with the examiner be to no avail, NAFCU-member credit unions have indicated that, depending on the weight of the matter, it can be advantageous to bring supervisory examiners into the conversation before resorting to a formal dispute," the association wrote.

Dunn could not say what CUNA would necessarily do with the data it collects since the data itself will suggest the next course of action, but it's unclear that credit unions necessarily have any course of action open to them other than to modify their operations to meet examiners concerns. NAFCU pointed out that it is not only credit unions that believe they are struggling under unfair or unprofessional examiners.

"Our industry may take some solace in the fact that we are not alone," NAFCU wrote, quoting a recent article in American Banker that said increased examiner scrutiny had begun part of bankers' lives these days.

For its part, NCUA said it is "making a concerted effort to protect credit unions from the aftermath of an unprecedented economic downturn. Examiners are working diligently to ensure that credit unions are managing all of their risks safely, so that credit unions will emerge from the crisis in an even stronger position to meet consumers' needs."

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