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August 03, 2017

NAFCU: NCUA SRC proposal would 'greatly enhance' CUs' ability to appeal

The NCUA's proposal to expand the number of supervisory determinations appealable to the agency's Supervisory Review Committee "would greatly enhance the current process by which credit unions can challenge material supervisory determinations," NAFCU wrote in an official comment letter Thursday.

"By providing broader avenues of redress, NCUA's proposal takes a commendable step forward in responding to industry complaints about lack of a satisfactory appeals process. We applaud Chairman McWatters' and Board Member Metsger's leadership on this issue," wrote NAFCU Senior Regulatory Affairs Counsel Michael Emancipator.

At its May meeting, the NCUA Board issued a proposal that would expand the number of supervisory determinations appealable to the agency's Supervisory Review Committee and provide credit unions the opportunity for additional review by the director of the Office of Examination and Insurance.

In the letter, Emancipator outlined several recommendations that "would increase the efficacy of the SRC process while simultaneously keeping the administrative burden low." Among his suggestions:

  • ease the process further by adding more optionality, such as allowing a federally insured credit union to appeal a material supervisory determination directly to the SRC without being required to first request reconsideration from the program office;
  • expand appealable material supervisory determinations to include CAMELS 1 or 2, both component and composite;
  • increase disclosure of publicly available data through a reporting requirement summarizing disputed examination issues elevated by credit unions to regional directors for a regional determination;
  • establish a credit union advisory council and an exam outreach officer that could conduct post-exam interviews with credit unions to determine whether the goals of a healthy exam are being met;
  • create a consistent SRC and not one that rotates members, as the proposal suggests;
  • increase the utility of the Ombudsman to the review process;
  • adopt recent amendments made by other federal banking agencies, such as the FDIC's recent changes that broaden banks' avenues of redress and increase the utility of their SRC process; and
  • support legislative efforts that would create an inter-agency material supervisory determinations review panel, such as the Financial Institutions Examination Fairness and Reform Act (Exam Fairness Act), H.R. 1941, introduced in the 114th Congress.

Emancipator detailed each of the association's recommendations in the letter, and listed some additional supported provisions, such as the possibility of an oral hearing before the board and the suggestion to codify the SRC procedure.

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