NCUA testimony before the House Financial Services Committee leaves elected officials with serious questions about the agency's actions.
In January, I wrote an article highlighting events that unfolded after North Carolina's State Employees' Credit Union ($23.7B, Raleigh, NC), with the blessing of state regulators, released its CAMEL score in an effort to boost transparency for its members.
NCUA subsequently cancelled its mutual examination program with the state's credit union regulators and reversed a long history of dual chartering cooperation. This week, NCUA also began conducting its own exams of all state chartered North Carolina credit unions.
The following clip — highlighted in the blog of State Employees’ CEO, Jim Blaine — shows NCUA Executive Director Dave Marquis being questioned about NCUA's actions during a hearing on bill HR-3461 "The Examination Fairness and Reform Act."
In the video, Rep. Mel Watt (D-NC) says, “Something arbitrary is going on in North Carolina,” and goes on to say NCUA’s reaction to the release of State Employees’ CAMEL rating was to "go out and make the [lives] of 52 other credit unions miserable, because we don’t like what the North Carolina credit union division has done with its own member.”
“Maybe you can explain to me why you think the NCUA has the authority, with a state chartered credit union, to go on this kind of witch hunt,” Watt says. “I think you are way beyond the authority that you have at the federal level to do this.”
On Friday, NCUA announuced it had completed its dual examiniations of state-chartered credit unions in North Carolina. Earlier in the week, Jim Blaine on Credit Unions posted a second video clip from the hearing (below) that features Rep. Don Manzullo (R-IL) taking issue with the “outrageous and arrogant” statements Marquis made regarding H.R. 3461. According to Marquis, the legislation would require NCUA examiners to “document each and every finding with specific references to NCUA rules and regulations.”
“You tell me what’s wrong with that?” Manzullo asks. “The sixth amendment, sir, says the accused shall be informed of the nature and cause of the accusation … your organization has an absolute obligation to tell the bank or credit union exactly, according to the rules and regulations, what they have done wrong.”
“If we had a rule and reg for every operational issue we encounter under safety and soundness, we’d have an awful lot of regulations,” Marquis responds.
“You don’t have any standards,” Manzullo says later during Marquis’ testimony. “The purpose of this legislation is so these people would know why they are being written up.”