Not voting is a vote. Not speaking up is condoning the statusquo. Doing nothing is the same as doing something. The absence oflight causes darkness. We all know these basic tenets yet practicalapplication can be tricky because reality is grayer than simpleclichés make it out to be.

Executives at Commodore PerryFederal Credit Union have alleged that an NCUA examiner madeinappropriate comments to employees of the credit union, and oncethey complained their exam score was dropped. The NCUA so far hasdeclined the credit union’s appeal of the exam score saying theexam was conducted following the agency’s policies andprocedures.

The SupervisoryReview Committee will be hearing the extraordinary appeal Nov.7, possibly as you’re reading this. On the agency’s Web pageexplained the SRC, it states that the committee is only to be usedwhen the issue cannot be resolved informally, which is how the NCUAboard expects disputes to be handled. On one hand, it makes sensenot to make a big stink with people you have to associate withprofessionally. On the other hand, it also implies a keep itin-house mentality.

The SRC, which codifies a 1994 law, required the NCUA toestablish an “independent, intra-agency appellate process to reviewmaterial supervisory determinations.” These determinations includeCAMEL ratings of 3, 4, or 5 and its components, loan-loss reserveprovision adequacy, loan classifications for loans consideredsignificant, revocation of RegFlex and denial of technicalassistance grants.

The committee is made up of three NCUA staff members named bythe NCUA chairman. Currently, the SRC members are Joy Lee, seniorFFIEC adviser to the chairman; Gerard Poliquin, trial attorney; andJudy Graham, program officer.

First, by definition the SRC is not independent because it isintra-agency. Safeguards are in place to keep certain positionsfrom serving on the board, including regional directors, theexecutive director or board members’ politicalappointees.

The process should be more transparent and independent. The NCUAwon’t even divulge which examiners examine which credit unions.When Credit Union Times reported the name of the SRC chairman,provided by the NCUA executive director, we were asked to remove itfrom our website. The agency’s unwillingness to shine a light onthis process seems to imply 1) they don’t want credit unions to useit and 2) they don’t want people to know what is happening withit.

In all previous cases before the SRC–just four since itsinception–it ruled against the credit union. All arrows indicateit’s not independent, it’s not known about or well understood, andcredit unions are discouraged from using it.

Commodore Perry may very well have deserved the CAMEL scoredecrease, but without transparency no one will know. Obviously, insome parts of the agency’s work discretion is required, but it alsocan hide personal or political matters affecting operations behindthe scenes. The primary issue at this credit union, as I understandit, is the ever-subjective M, as it is at other credit unions likeSECU. Note that both institutions are in Region III. The sameregion–same state even–that brought us St. Paul Croatian FCU, believed to be the largest naturalperson credit union loss in history at $170 million. The sameregion responsible for examining New London FCU, dinging the industry for more than $12million.

But what’s being lost in the shuffle is the initial issue. Thequestion is whether the agency is willing to seriously consider theallegations of sexual harassment that have been made by CommodorePerry employees. The accused examiner would be covered by theNational Treasury Employees Union. The OIG report was not madepublic as of press time but that appeal had already beendismissed.

On a separate note, out thoughts are with the victims ofHurricane Sandy. Credit union professionals and volunteers and manyothers are serving as heroes during this time of crisis. We applaudyou all.