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August 18, 2015

Berger to NCUA: Return to 18-month exam cycle

NAFCU President and CEO Dan Berger urged NCUA in a letter Tuesday to return to an 18-month examination cycle to cut down on duplicative examination expenses, including high spending on airfare and auto rentals for examiners.

Berger expressed NAFCU's appreciation for NCUA's increased budget transparency. However, he noted that the $6.39 million allocated for employee airfare and auto rentals could be streamlined by transitioning to a longer examination cycle, which NCUA has done in the past. He explained that an 18-month exam program would allow NCUA more flexibility in balancing staff and resources without compromising the safety and soundness of the industry.

"Given that current risk to the NCUSIF and economic trends mirror 2001-2007, NAFCU and our members strongly urge the agency to implement an 18-month examination cycle," Berger wrote. "Specifically, NAFCU suggests that NCUA allow federal credit unions determined to be ‘low risk' to receive no more than two exams in a three-year period … Simply put, this approach will allow NCUA more flexibility in balancing staff and resources without compromising the safety and soundness of the industry."

Berger also emphasized that the risk present to credit unions today does not expose the National Credit Union Share Insurance Fund to the same degree of risk presented by the financial crisis, when the cycle was shortened. He also said NAFCU has examined the equity ratio and distribution of CAMEL codes across the credit union industry, and it found that conditions are "demonstrably better than 2008-2014, and favorably similar to 2001-2007."

Berger noted that NCUA has begun to reallocate resources from smaller, well-run credit unions to larger, more-complex institutions through the Small Credit Union Examination Program, and he urged the agency to continue streamlining the examination program by returning to an 18-month examination cycle.