CUNA Urges NCUA to Hear Out CU Appeals

Credit Union National Association (CUNA) President/CEO Bill Cheney said the National Credit Union Administration (NCUA) should not only give full consideration to the evidence that Commodore Perry FCU, Port Clinton, Ohio, has given in its appeal of an NCUA examination determination, but also should "take every opportunity to demonstrate the fairness, objectivity, and transparency of its appeals process."

Cheney made the comment following news that NCUA's Region III director rebuffed the credit union's challenge to its examiner's conduct, a decision also questioned by the Ohio Credit Union League.

Commodore Perry FCU recently challenged an NCUA examination determination, claiming that an NCUA examiner moved to lower its CAMEL rating as an act of retribution.

Commodore Perry FCU President Thomas Renz told News Now his credit union reported an NCUA examiner's "extremely unprofessional" conduct to agency superiors, and asked for a new examiner.

However, the NCUA examiner that was the subject of the credit union complaint was allowed to
complete his examination, in spite of the credit union complaint. The final report resulted in the lowest examination ratings that the credit union has ever received, Renz said.

The findings were challenged by Commodore Perry FCU. NCUA Region III Director Herb Yolles, however, upheld the agency's decision and NCUA's Supervisory Review Committee (SRC) agreed.

Commodore Perry FCU's examiner misconduct claims were investigated by the NCUA Office of the Inspector General (OIG), but the OIG said it could not find evidence of detrimental conduct by its examiner.

Commodore Perry's Renz said the SRC's rejection of his credit union's appeal came as no surprise. "While we have not yet had time to completely analyze the results of our appeal we can see that a number of the findings are simply factually incorrect," he said, adding that the rejection of the credit union's appeal "has further demonstrated how broken the examination and appeals process is and how important it is for our industry to push for change."

Renz said his credit union will request clarification on several of the points in the results of the appeal, and will also appeal to the NCUA Board of Directors.

Cheney on Wednesday said "CUNA strongly supports the rights of credit unions to appeal examination issues but credit unions have long told us they have little faith in the impartiality or effectiveness of NCUA's appeals process. The infrequency with which appeals are filed reinforces those concerns."

Paul Mercer, Ohio Credit Union League (OCUL) President, said the overall effectiveness of the NCUA's examination appeal process "is a matter of perspective."

The appeals process functions well "if intended to affirm the infallibility of NCUA's work," but for credit unions seeking balance and fairness, "the process falls short," he said.

"Undoubtedly, there are greater concerns among credit unions about NCUA--a budget process lacking restraint, prescriptive supervision, undermining of the state system; however, the absence of a meaningful appeal process is a serious vulnerability for all. NCUA's promotion of the virtues of the current process will not cause change. Understanding this, the Ohio League will focus on gaining support for the Financial Institutions Examination Fairness Act," Mercer said.

The Examination Fairness and Reform Act (S. 2160) would improve the exam process for financial institutions. S. 2160 and a similar House bill, H.R. 3461, would make information gathered by financial regulatory examiners available to financial institutions, codify certain examination policy guidance, and establish an exam appeals process that would allow financial institutions to air grievances before an independent administrative law judge. Both bills have been referred to their respective financial institution committees.