Press

As NCUA Expands Examiner Ranks, Federation Urges Increased Training on CDCU/LICU Examinations

Contact: Rafael O. Morales, Public Affairs Officer ● 212-809-1850, ext. 206 ● rmorales@cdcu.coop

(December 16, 2010 – New York, NY) According to its December Agency Report, the National Credit Union Administration (NCUA) has announced its plan to expand its examiner ranks in order to provide increased examination coverage for credit unions nationwide. Citing concerns from community development credit unions (CDCUs) and other Low-income Credit Unions (LICUs) that examiners have been inconsistent in their examinations of these institutions, National Federation of Community Development Credit Unions (Federation) President/CEO Cliff Rosenthal recently submitted a letter to the NCUA Board requesting that the agency ensure that any new examiners hired in the coming months have access to specialized training on examinations of LICUs and CDCUs.

In his letter, Rosenthal outlined the Federation’s concerns. “In a number of meetings over the last ten years, agency staff has confirmed that new or less experienced examiners are often assigned to small and low-income credit unions, presumably because these are less complex institutions that represent a smaller degree of material risk to the NCUSIF,” the letter read. However, Rosenthal also pointed out that “Because low-income credit unions and CDCUs often do not fit the mold or demonstrate the ratios and operating characteristics of other credit unions, the examination process has often been a rather rocky one… [and] As some of our CDCUs have put it, they have needed to “educate the examiners [themselves].”

While credit unions have reported that implementation has not always been uniform, Rosenthal praised the agency for its efforts to date, but stressed the need for more consistent implementation. “We appreciate the leadership that you and your fellow board members have shown in developing the supervisory letter on examination of low-income and community development credit unions,” Rosenthal said. “Given the stress in the credit union industry, and especially in view of the vulnerability of many of our smallest institutions, it is especially important that new examiners are well trained on this document [and] hope that this training will be an integral and significant part of the orientation of new, as well as existing, NCUA examiners.”

Among its central advocacy goals, the Federation has worked closely with NCUA for years to provide guidance to examiners working with credit unions serving low- and moderate-income communities, credit unions whose membership characteristics intrinsically affect its financials in ways “peer” credit unions that don’t serve a primarily low-income market are not. NCUA Board Member Gigi Hyland in particular, has been leading this effort at the agency.

The Federation’s leadership in this area led to NCUA’s 2006 CDCU/LICU Examinations Whitepaper and more recently to its Jan 2010 CDCU/LICU Examiner Guidance Letter (10-CU-01). Additional information about the Federation’s advocacy work with the NCUA is available on its website at: http://www.cdcu.coop/i4a/pages/index.cfm?pageid=786.

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The National Federation of Community Development Credit Unions (Federation) is a certified CDFI Intermediary representing more than 235 community development credit unions (CDCUs). The Federation’s member CDCUs provide credit, savings, transaction services and financial education to more than 1.5 million residents of low-income urban, rural and reservation-based communities across the United States, and hold over $9.5 billion in community-controlled assets. The Federation also represents 50 Community Development Partners, some of the nation’s largest credit unions with a special commitment to serving low-income communities. Founded in 1974, the Federation is headquartered in Lower Manhattan with offices in Colorado Springs, CO; Madison, WI; and San Francisco, CA. The Federation offers a wide range of advocacy, educational, training, investment, marketing, and outreach programs to support and assist CDCUs. For more information about the Federation and its programs, please visit: www.cdcu.coop.