LAS VEGAS - Tough examiner scrutiny is no excuse for credit unions that fail to capitalize on a financial marketplace that has swung in their favor, thanks to the housing market collapse and the credit crunch, according to some analysts.
"I can't deny the fact that there are differences between (regulatory) management and the people in the field. The reality is that many at the top don't see what the people in the field see," said Bob Dorsa, president of the American Credit Union Mortgage Association (ACUMA).
While regulators may be making it tougher for some credit unions to issue workout loans to members facing foreclosure and are scanning the balance sheets scrupulously to ensure that their sector of the industry does not become the next Bear Stearns, Dorsa insisted that the possible handcuffing cannot "get in the way of the fact that we have a big opportunity that few of us are taking advantage of" in this turbulent time.
He noted that regulators are "very concerned and protecting the share insurance fund and do not want to see credit unions to go way out on the risk side of things."
"I sense that the examiners have observed some pretty horrific stuff," Dorsa added.
A Legitimate Gripe
Though credit union executives may have a legitimate gripe when it comes to examiners being overly stringent, Dorsa urged the institutions to defend their positions vigorously and use the system for what it is.
"Maybe the examiners, through that process, will be educated and look at the next credit union with a little more fairness," he suggested.
CUs should also note that regulators are in a tough position when it comes to risky mortgage-related loans in an effort to balance what is good for the member, what is good for an individual credit union, and what is good for the trade as a whole.
"What concerns the examiners as much as anything is that there is no proven track record of what these (workout) loans are going to do," said Dorsa. "We have to validate that the examiner's suggestion is realistic and valid. And if it is, I think it is incumbent on the CEO to get his pencil out and figure a better way to do it. If everybody tells you that you're wrong and you're doing stupid things, then step up to the plate and bear the responsibility of the mistake."
While credit unions may be feeling the regulatory pinch, banks and thrifts are assuredly living in an even tougher environment.
Given the financial and economic conditions, Dorsa sees the upcoming 100th anniversary of credit unions in the United States as the perfect opportunity for the sector to get in front of the public at-large and explain the credit union vision.
"It's time for the credit union system to reinvent itself, and why not now?" he said. "We can't be lazy and just sit back. We have to do something now."
(c) 2008 The
