Conceding that it is a "fine balance," NCUA Chairman Debbie Matz told two key lawmakers that the agency is modifying its examination standards to give credit unions more flexibility while being certain that safety and soundness standards are being met.
She said the agency is working on a supervisory letter to its examiners that will encourage them to "show flexibility if a credit union demonstrates adequate long-range strategic planning that would enable the institution to weather broader economic difficulties. Our view is that in certain circumstances it may be appropriate for a credit union to forego short-term earnings so that a high level of member service can be maintained, and the guidance will reflect that direction."
Matz made her comments in a letter to House Banking Committee Chairman Barney Frank (D-Mass.) and committee member Walt Minnick (D-Idaho), who had written a letter to all banking regulators urging them to "show some temperance" so financial institutions could lend more money and help jumpstart the economy.
She also noted that the agency had signed on to a joint policy statement of the Federal Financial Institutions Examination Council in support of "prudent commercial real estate loan workouts."
Matz also said that NCUA Board Member Gigi Hyland is hosting a webinar on Nov. 18 on member business lending for credit unions that currently offer MBLs and those considering doing so. The webinar will provide guidance and best practices information from the perspective of state and federal regulators.
She added that the fact that credit union lending has increased by almost $10 billion during the first three quarters of 2009 when credit in other sectors is slowing down is a "clear indication that NCUA examiners are balancing safety and soundness concerns with an understanding of the importance of appropriate levels of credit union service to their members."
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