Senate Banking Committee Chairman Tim Johnson is askinginspectors general of financial regulators to review whetherexamination procedures are hurting the ability of small financialinstitutions to do responsible lending.

Johnson (D-S.D.) wrote the inspectors general of the NCUA, theTreasury Department, the Federal Reserve and the FDIC that he hadreceived complaints that financial regulators are “conductingexaminations with unclear standards or with inconsistentapplication of agency policies and procedures.''

He asked the inspectors general to audit their agencies todetermine examination timetables and methods for ensuring theconsistency of the examination process. He also asked theinspectors general to review the procedures for challengingexamination results and “the frequency and success of suchappeals.”

He wrote that credit unions and community banks say that“examination concerns create uncertainty in their businessoperations and hesitation to provide credit to theircustomers.''

Johnson's letter comes two weeks after the House FinancialServices Committee held a hearing on legislation that would allow financial institutionsto appeal their examination results to an administrative lawjudge.

The NCUA said the legislation would increase costs and threatenprocedures to protect the safety and soundness of creditunions.