The examination process at the NCUA went on trial last week. Notbefore a court but before Congress, though it could end up incourt, too, if legislation in Congress makes it through to law. TheFinancial Institution Examination Fairness and Reform Act (H.R.3461) would create an ombudsman within the Federal FinancialInstitutions Examination Council to help ensure the consistencyacross the regulators and financial institutions.

The legislation is none too late given that the regulators–notjust the NCUA–were a key piece that malfunctioned leading up to thefinancial crisis. With financial institutions receiving moreoversight from their regulators as well as the Consumer FinancialProtection Bureau, the federal regulators should be called upon tobear their own compliance burdens.

The credit union representatives who testified at a Househearing last week included words like “draconian supervision” and“rigid parameters.” They stated, “Credit unions have the right tomanage risk without being directed by examiners to eliminateit.”