What the Regulatory Exam Process Could Be


By Ryal Tayloe

Earlier this year, Carrie Hunt, NAFCU’s senior vice president of government affairs and general counsel, was recorded suggesting that the NCUA exam process would be more stringent on credit unions in 2014 than previously. An ongoing CUNA survey1 also found that four out of five respondents expressed that weightier regulatory and examination requirements had already put additional pressure on resources during 2013.

Here is what the first quarter of 2014 revealed so far2:

  • More than 3,200 new pages of regulatory requirements have been added
  • The number of regulator enforcement actions has increased to 165, up from 134 in the previous quarter
  • Per-institution compliance costs averaged $37,621 per quarter

cut253510091401img001-crop-600x338Clearly, the financial downturn has changed financial institution regulatory landscape forever and most industry experts advise credit unions to learn to adapt because there will be no retreating. The “new normal” is increased legislation, enhanced regulator expectation of credit union management cooperation, and longer safety and soundness examination time frames, which averaged more than nine days for credit unions last year. More examiners are on-site these days—as many as 30 examiners per exam in some instances—and they are requesting more documentation, reporting and access then ever before.

So what should credit unions do? For starters, accept the situation, but take all necessary steps to make the examination process less disruptive, easier on your credit union and staff, and as cost effective as you possibly can. It is possible for you to ease the examination headache and keep control of the process.

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