Newsroom

July 27, 2012 – NCUA's announcement at NAFCU's Annual Conference Thursday of its plan to open a new National Examinations and Supervision Office next year followed about two years of consideration and discussion within the agency, NCUA Chairman Debbie Matz told NAFCU Today during a post-address interview.

In her conference speech, Matz told credit unions that the new office will oversee natural person credit unions having more than $10 billion in assets and take over the supervision of the corporate credit unions. She said the new office would use existing resources "to the extent possible."

In an interview later, Matz said the agency began to think about a program for better addressing risk about the time of enactment of the Dodd-Frank Act, when the Financial Stability Oversight Council was formed. (She is a voting FSOC member.) The plan was discussed a few times among agency executives that were part of an internal working group on systemic risk, she said.

"We had a huge amount of systemic risk within the credit union industry," said Matz. The agency "wanted to come up with a plan for assessing risk . . . in a way that was budget-neutral."

The National Examinations and Supervision Office, which opens Jan. 1, will have a year of transition, she said, so the new examination process won't begin until 2014.

She said the new office will be headed by Scott Hunt, currently director of NCUA's Office of Corporate Credit Unions. That office has 36 staff, and they will be able to apply to move to the new examination and supervision office. Regional examiners will be able to apply as well.

Matz notes that all the agency's examiners are going to be cross-trained. She added that the new examinations and supervision office will draw on subject-matter experts and get input from the regional directors to ensure there are "as many sets of eyes on this as possible."

One thing NCUA did not do was discuss the plan for a large-credit union exam office with the four credit unions already past that $10 billion threshold: Navy Federal, Pentagon FCU, BECU and State Employees CU (North Carolina). Matz said staff were setting up phone calls with the CEOs to explain the program. Those calls were expected to occur today and yesterday, she said.

Other credit unions will come into this program as they grow, she added, such as SchoolsFirst FCU in California.

NCUA produced slides on the distribution of examination hours spent on credit unions of different asset-size groups. The largest group detailed includes those with more than $5 billion in assets. The agency says these institutions hold 16 percent of total industry assets, though NCUA only devotes 1 percent of its examiner hours to them.

There was no breakdown for that handful of institutions with more than $10 billion in assets. Asked how the distribution would change for those largest of credit unions later, Matz didn't have an estimate. But she and her staff noted this is being reviewed by the agency's Office of Examination and Insurance, headed by Larry Fazio.