The NCUA is hosting listening sessions around the country forcredit unions to air their grievances. The agency is providingnotepads to write down comments and questions that can then beshared anonymously with the group for NCUA response.

As an observer at the NCUA listening session in Alexandria lastweek, I heard a lot of things you'd expect. Questions from theaudience ranged from are examiners evaluated after examining acredit union to what is the agency doing about credit unionsconverting to mutual savings banks to escape the corporateassessments.

On the exam front, NCUA Executive Director Dave Marquisexplained that the NCUA had to follow certain federal governmentrequirements, such as giving preference to veterans, but the agencywas also looking for recent college grads and those with experiencein the industry. The new recruits go through what he calledrigorous training, and they co-examined credit unions for six tonine months before going out on their own. Their results arereviewed multiple times a year by a supervisory examiner as well asthe department of supervision.

Given this outline, it seems there's plenty of oversight of theexaminers. My question would be is it the right kind of oversight?Have these folks in charge of oversight ever worked at or run acredit union or any business? I believe inherent in the ability toprovide oversight to credit unions is a modicum of understandingfor credit unions' day-to-day experiences. As has been the casewith the NCUA and other parts of the government, it doesn't reallyhave to earn money to keep the lights on; it makes assessments.Also federal government hiring procedures can make hiring outsiderstricky because they favor those already within the government.

Some credit unions have complained that they feel like they'retraining their examiners. A senior executive with the NCUAcommented to me after the meeting that that's not necessarily a badthing. To a degree, that's correct. Assuming that the CPAs andfinance people that the NCUA hires as examiners have the basicsdown, on the job training is the best kind to get. And who betterto train them than those running the credit unions every day?You're going to pay for training anyway through premiums, so whynot take the week or two your examiner is in to explain the factsof life. Overseeing a number of credit unions can provide theexaminer a variety of points of view that will build lifelonglessons.

One of the things the NCUA asked for during the listeningsession was that credit unions be prepared for their examinations,yet the credit union leaders in the room seemed to concur that itwasn't communicated to them what exactly they should be preparingprior to each exam. It was as if a collective light bulb went onover the tables of department heads and supervisory examiners inthe room. They really are listening, and it's your and their jobs to makesure they follow through on consensus items like this one.

An underlying theme of the listening session, in fact, waspositive and clear communication. NCUA Director of Examination andInsurance Larry Fazio suggested that particularly at exam time,tensions can run high but keeping your cool and asking to takebreaks at frustrating times can help ease the process. Also,meeting before hand for coffee with your examiner can help buildrapport. Treat them as you would any other business partner (buttake separate checks per government ethics guidelines, as Faziojoked at the listening session). Examiners, despite some rumors,are human beings and building relationships is how you deal withanyone you do business with.

I think the key piece of advice though that Fazio offered wasfor both examiners and credit union executives to differentiatebetween the person and the institution. Many of us love our jobs,and we take things a little too personally. After all, you spendmore time at work than most anything else. If things are not going100% right, Fazio acknowledged, it's not always management's fault;local economic conditions can be at fault, for example.

However, NCUA Chairman Debbie Matz pointed out that examinerswill err on the side of caution because they don't want their nameassociated with a material-loss report. Herein lies the crux of thetension between examiners trying to protect the insurance fund andcredit union executives trying to run a business.

The NCUA's first listening sessions boded well for credit union leaders' abilityto be honest yet fair. The NCUA representatives also said theywould take some of the issues discussed and work on them.

NCUA's Marquis pointed out that the agency used to perform asurvey of examinations but dropped it because credit unions alwayssaid their examiners were fine. Even anonymously, credit unionexecutives didn't raise issues and times were good, so manyprobably figured why rock the boat. The last few years have beenhighly tumultuous and it's appropriate to revisit this process, butcredit union leaders need to commit to fulfilling their end of thebargain by speaking up.