What Should Credit Unions Demand From NCUA Exams?

Examinations require an investment, and credit unions, CUSOs, and credit union members should have a clear set of goals for that effort.


Examinations require an investment on the part of the examined, and those being examined should have expectations about what they gain from that effort. If credit unions, CUSOs, and credit union members could ask the NCUA to provide a return for our examination investment, what would we ask for? Do we know?

The credit union industry should share a common set of examination goals. Unfortunately, we have no idea whether the NCUA remembers, or cares, that we even have goals for our investment in examinations.

Do you know what your examination goals are? Take this three-question test to find out.

  1. Do you invest in an examination so you can build a better business?
    • If YES: Can you think of three things from your last examination that improved your business?
    • If NO: How would you lobby the NCUA to change the process?
  2. Do you invest in an examination to drive innovation and improve the process?
    • If YES: Can you name which innovations over the past three years made you the proudest?
    • If NO: How would you let the NCUA know they’re asleep at the wheel?
  3. Do you invest in the examination process to ensure you are working with the best of the best when it comes to financial regulators?
    • If YES: Do you think the NCUA is as worried about its reputation as you are?
    • If NO: How would you let the NCUA know your affiliation with it is not improving the quality of the credit union brand?

For years our industry has accepted the status quo in regard to our relationship with NCUA and what we suffer during and after examinations. Whether that status quo is based on our own apathy or self-protection is for each of us to decide. Whether that status quo is based on the NCUA’s internal resistance to change and bureaucratic indifference is something we should take up as an industry. The power to change the status quo for future credit union generations might be more in our own hands than many of us think.

Imagine this: Political pressures continue to build for a realignment of regulatory agencies over the financial services industry. A one-size-fits-all mentality continues to gain momentum. The future of the NCUA becomes more in doubt every day. In a last-ditch effort, a future NCUA board reaches out to credit unions and asks us to testify to the fact that we want the NCUA in our future. It asks us to confirm that we believe our marriage to the NCUA enhances our brand and promotes the credit union industry. It wants an endorsement that the NCUA examination process is a testament to its understanding, coordination, and contribution to the health and quality of credit unions.

How would we respond? Could we honestly say we did everything possible to build, with the NCUA, a relationship worthy of our speaking out on its behalf, even if doing everything possible meant fighting publicly with the NCUA and not just complaining to a field examiner?

Many of us have forgotten, or never knew, that as an industry, as customer-owners, as individuals, we worked with the government to build the structures that govern us today; therefore, it makes sense that we should take responsibility for how those structures are evolving and how our investments in these processes pay off for us.  We are not victims. We should realize that if we suffer from our relationship with the NCUA, it’s because of our own indifference.

As a CUSO CEO, I believe the entire credit union industry has an opportunity in NCUA’s march toward more oversight of the CUSO industry. The opportunity is for us to invest as CUSOs in a more innovative examination process, to be the template for a different approach to NCUA examinations, and to see if that template might improve credit union examinations.

I recently asked my board and my CUSO owners what they thought their investments in the examination process should garner for their institutions. They were not at a loss of words about their wishes. What stumped them was how to organize, how to speak out, how to influence the NCUA. They were at a loss to say how to launch the process that would lead to better credit unions, a lower cost for examinations, and a pride in our industry’s ability to work together with our examiners.

My sincerest hope is that on the day we are called to testify as to what we want from the NCUA, we won’t be at a loss for words or embarrassed for decades of not working toward common goals.




Feb. 22, 2012


  • This is a excellent article of what we should expect from the examination process. Actually, years ago the examination process would have been consistent with Randy's suggestions.

    NCUA went to a risk focused examination program. Their myopic view is only based on risk and not opportunity. I guess they do not think that missed opportunities are also risky!

    There is a great unintended consequence to NCUA's Risk-Focused Examination. The consequence is that credit unions are not competitive and are not adapting to needed changes.

    This is evidenced by the rise of payday lending and check cashing stores next to credit unions. The Treasurer of the United States is looking to allow companies like Wal-Mart to get bank charters so they can help the unbanked. This indicates that the Treasurer has determined that Credit unions are no longer part of the solution. I guess that makes them a part of the problem.
    Bill Brooks
  • Randy;

    You are spot on, yet despite all the BLOGs and commentary by folks like you and Chip, NCUA and the state examiners are dug in and will continue to act with impunity. The credit union CEO's I have spoken with are reluctant to speak publicly for fear of reprisal. Leadership at NCUA and state regulatory agencies has failed.

    I am working on a book that details events and actions by NCUA and the Florida OFR and my requests for any positive stories about those rogue agencies yielded nothing but horror stories.

    Unless and until CEO's and their Boards are willing to stand up for truth, honor and transparency, nothing will change. As soon as every credit union and their trade associations says we will never have a meeting with NCUA or OFR exmainers without our attorney and a tape recorder, nothing will change.
    Coach Tom
  • At this point there is not much I expect from NCUA except for it to continue to try to mico manage and over regulate (as the govt. does in every field under Obama.

    I considere NCUA to be a rogue agency that needs to have its wings trimmed.

    So---I just want them to do what they have to do and get out.!!
    Hank Dews