It may as well have been called the “LarryFazio Show,” as many questions as the director of the NCUA'soffice of examination and insurance fielded during the regulator'sVirtual Town Hall online broadcast Thursday.

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Although the event prompted questions in several areas, fromemergency liquidity to the recent legal decision to allowcredit unions to change field of membership charters in order tomerge, it was Fazio who fielded questions about exams, which wasthe most popular topic of the afternoon.

NCUA Chairman Debbie Matz opened the online broadcast with a30-minute review of recent rules, achievements and changesgenerated by the regulator this year, and after introducing 12senior staff members, opened the town hall up to questions from thevirtual audience.

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One credit union asked if a document of resolution can be issuedwithout management being allowed an opportunity to discuss it.Fazio said by definition, a DOR is a record of agreement betweenthe examiner and credit union regarding how a problem will beremedied. As such, the examiner and credit union management shouldhave discussed the DOR issue during the exam process.

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“A DOR should not be a surprise to management during a jointconference,” Fazio said.

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Another credit union asked Fazio to clarify the differencebetween a DOR and an exam finding. Fazio said the agency is workingon clarifying that as well.

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“A DOR is either an existing or potential material threat to theviability to the credit union, either financially oroperationally,” he said. The NCUA is working out the details ofthat definition, particularly the determination of what constitutesa material threat.

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Fazio added that one exception to that DOR definition is theBank Secrecy Act. The NCUA has made an agreement with “anotheragency” that any BSA violation is elevated to a DOR.

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A credit union reported that their examiner used to provide adraft of the exam report prior to the exit meeting, but doesn'tanymore. Fazio said examiners aren't required to provide the draft,but customarily does leave one by the time the examiner conductsthe joint conference with the board. However, credit unions shouldbe provided with a draft of a DOR by the examiner's last day onsite, when the exit meeting takes place.

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The exam appeals process came up, with a credit union asking howthe agency's zero tolerance policy against retaliation works. Executive Director David Marquis fielded thequestion, and said if the NCUA receives “any type of informationrelated to (retaliation)” several layers of review are in place.Credit union complaints about retaliation are usually received bythe supervisor examiner, who then elevates the issue to theregional director.

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Depending up on the nature of the complaint, the regionaldirector may forward it to the Office of Inspector General. If thecomplaint is an exam issue, it oftentimes goes to the SupervisoryReview Committee, Marquis said.

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Other questions asked during the town hall concerned thepotential regulatory relief credit unions between $10 million and$30 million might receive if the proposed rule to increase thesmall credit union threshold is finalized; clarifications regardingthe proposed emergency liquidity rule; and, questions about shareinsurance fund premiums and corporate stabilizationassessments.

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