WASHINGTON-While federal financial regulators testified against the Financial Institution Examination Fairness and Reform Act last week, credit unions' two major trade groups expressed their support for the propsed legislation.
The bill is "a firm step in the right direction toward ensuring the federal financial institution regulatory agencies conduct fair exams, which are consistent with the law and regulation and ensure safety and soundness," said Ken Watts, president of the West Virginia CU League, who testified on behalf of CUNA before a hearing in the House.
The bill includes provisions that would allow credit unions and other institutions to raise concerns they have with exams with a newly created Federal Financial Institution Examination Council (FFIEC) ombudsman, and to further appeal regulators' decisions to an independent judge, among other things.
While acknowledging the bill would not resolve all examination-related issues credit unions face, Watts told the subcommittee the legislation will "lead the NCUA and the other regulators to take steps to ensure that examiners treat credit unions fairly and that they acknowledge credit unions should have the flexibility to manage risk, consistent with legal and supervisory requirements."
Watts told Congress many credit unions remain mum over their concerns about examinations out of fear of retaliation from their regulators. NAFCU's representative at the hearing, Jeanne Kucey, president of Jetstream FCU in Miami Lakes, Fla., also testified in support of the bill.
"Regulatory agencies in Washington try to interpret the will of Congress, examiners in the field try to interpret the will of their agency, and financial institutions often become caught in the middle," Kucey said.
Kucey said there are flaws in the current process for appealing supervisory decisions, and that without an independent third party to review appeals, NCUA serves as the prosecutor, judge and jury during the process, she said.
Like Watts, Kucey stated that many credit unions fear retaliation should they complain.
