NCUA: Disclosing CAMEL Rating Could Undermine Confidence in CUs

In a letter to North Carolina credit unions, David Marquis, NCUA Executive Director, argues that disclosing a credit union's CAMEL rating could jeopardize the public confidence in credit unions and could lead to a run on credit unions.

Marquis wrote that releasing a credit union's CAMEL rating raises many difficult questions.

 What if some credit unions release their CAMEL ratings, but others do not? Will media coverage imply that credit unions which do not release CAMEL ratings are less safe than others? Could this potentially cause runs on credit unions?

 Does a released CAMEL rating imply an official government body’s endorsement for one credit union versus another? Will consumers only choose credit unions with the highest possible CAMEL rating as safe, and withdraw from all others?

 What happens if a credit union’s publicly disclosed CAMEL ratings decline over time? Would that credit union stop publishing its ratings, and if so, would the public assume the credit union now has something to hide? Would members fear their credit union is becoming less stable, and thus pull out all their money?

 What if a state CAMEL rating differs from NCUA’s CAMEL rating, as happens on occasion? Does releasing only one of two ratings truly provide full transparency to the public?

 After publicizing CAMEL ratings, will other formerly confidential information be next? Should Documents of Resolution be published?