March 27, 2020

Berger calls for exam relief, further reg adjustments from NCUA

Dan BergerAmid impact from the coronavirus outbreak, NAFCU President and CEO Dan Berger Thursday urged the NCUA to cease all examination activity and make other regulatory adjustments that would alleviate strict compliance requirements currently in place for credit unions.

Berger pointed to the Federal Reserve’s announcement earlier this week ceasing all regular examination activity for institutions under $100 billion in assets and holding all examinations off-site to help minimize disruption and burden on financial institutions and calls for similar action from the NCUA.

“NAFCU requests the NCUA issue a statement adopting a similar approach for the credit union industry,” Berger suggested. “NAFCU does not support an arbitrary asset threshold as the deciding factor for which institutions receive an off-site examination versus no examination at all, but instead urges a risk-based analysis and approach to deciding whether safety and soundness concerns or another urgent need demands an examination now instead of deferring to later in the year.”

Although the NCUA’s updated FAQs indicate that the agency will be focused on off-site examinations through its secure information exchange portal, the entire examination process may pose substantial burden for credit unions at this time. In addition, the burden may be amplified in rural areas where staff working from home may have limited or slow internet access.

“Considering all credit unions across the country are affected, to some extent, by COVID-19, this extraordinary situation warrants a pause on examination activity until the fall of 2020 to allow credit unions an opportunity to focus on working with and meeting the needs of their members,” wrote Berger.

Additionally, Berger asked the NCUA provide several relief measures aimed at simplifying the processes of loan modifications, appraisal requirements for mortgages, and limitations on carrying and charging off negative balances.

The Senate-passed Phase 3 coronavirus relief package, the CARES Act, provides the NCUA with broad authority to suspend generally accepted accounting principles (GAAP) requirements with respect to loan modifications related to the coronavirus that would otherwise be categorized as troubled debt restructurings (TDRs).

“NAFCU and its member credit unions urge you to act swiftly to address these issues as consumer hardships and economic realities have already started to impact credit union operations,” Berger concluded.

The association will continue to work with the NCUA and stakeholders, including President Donald TrumpNational Economic Council Director Larry Kudlow and Congress, to obtain relief for the credit union industry and its more than 120 million members.