The NCUA is hosting listening sessions around the country for credit unions to air their grievances. The agency is providing notepads to write down comments and questions that can then be shared anonymously with the group for NCUA response.

As an observer at the NCUA listening session in Alexandria last week, I heard a lot of things you'd expect. Questions from the audience ranged from are examiners evaluated after examining a credit union to what is the agency doing about credit unions converting to mutual savings banks to escape the corporate assessments.

On the exam front, NCUA Executive Director Dave Marquis explained that the NCUA had to follow certain federal government requirements, such as giving preference to veterans, but the agency was also looking for recent college grads and those with experience in the industry. The new recruits go through what he called rigorous training, and they co-examined credit unions for six to nine months before going out on their own. Their results are reviewed multiple times a year by a supervisory examiner as well as the department of supervision.

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

Some credit unions have complained that they feel like they're training their examiners. A senior executive with the NCUA commented to me after the meeting that that's not necessarily a bad thing. To a degree, that's correct. Assuming that the CPAs and finance people that the NCUA hires as examiners have the basics down, on the job training is the best kind to get. And who better to train them than those running the credit unions every day? You're going to pay for training anyway through premiums, so why not take the week or two your examiner is in to explain the facts of life. Overseeing a number of credit unions can provide the examiner a variety of points of view that will build lifelong lessons.

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

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

I think the key piece of advice though that Fazio offered was for both examiners and credit union executives to differentiate between the person and the institution. Many of us love our jobs, and we take things a little too personally. After all, you spend more time at work than most anything else. If things are not going 100% 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 examiners will err on the side of caution because they don't want their name associated with a material-loss report. Herein lies the crux of the tension between examiners trying to protect the insurance fund and credit union executives trying to run a business.

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

NCUA's Marquis pointed out that the agency used to perform a survey of examinations but dropped it because credit unions always said their examiners were fine. Even anonymously, credit union executives didn't raise issues and times were good, so many probably figured why rock the boat. The last few years have been highly tumultuous and it's appropriate to revisit this process, but credit union leaders need to commit to fulfilling their end of the bargain by speaking up.

Instant Insights /

Evidence That NCUA Listens When CUs Speak: Editor's Column

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