NCUA to Allocate Resources to Areas of Greatest Risk

While NCUA Chairman Matz's speech at CUNA's Government Affairs Conference had the usual applause lines about increased business lending authority and the need for supplemental capital for credit unions, her speech also detailed how the agency is revamping itself to meet challenges confronting credit unions.

Chairman Matz stated that the agency is "reallocating resources toward the highest risks." NCUA's exam program is being overhauled so that small and large credit unions will be treated differently. NCUA examiners will spend "more time in large credit unions which pose the greatest risks to the Share Insurance Fund, and less time in well-performing, smaller credit unions."

She also noted that NCUA has a responsibility to protect credit unions from unacceptably risky actions taken by other credit unions. Credit unions will no longer be given "a pass on adhering to policies which protect safety and soundness." If there are deficiencies, examiners are going to write Documents of Resolution and hold credit unions accountable to address these deficiencies.

She also points out that as credit unions become more sophisticated and complex, the agency needs to hire subject matter experts to address these emerging issues.

My take away from her speech is that if you are a small credit union offering plain vanilla products, you should see less regulatory burden. On the other hand, large credit unions and credit unions offering sophisticated products should expect greater scrutiny.

Read Chairman Matz's speech.