RALEIGH, N.C. – The ongoing dispute with NCUA over public disclosure of CAMEL codes could cause a mass exodus to federal charter of state credit unions who worry about dual examinations enacted by NCUA to punish State Employees’ CU for disclosing its CAMEL rating.
It would be the biggest exodus from state charter in one state since 2005 when most of Utah’s state charters converted to federal amid a big fight by the state’s bankers to tax credit unions.
A new survey released by the North Carolina CU League found that almost a third of North Carolina’s 48 state chartered credit unions may switch to a federal charter if the dispute between state and federal regulators is not resolved.
The league announced the findings in the wake of a survey of all but two of the 48 state chartered credit unions in the state on the impact of dual exams enacted by NCUA to penalize state regulators for their role in allowing SECU to publicly disclose its CAMEL rating.
“Credit unions appreciate the value of the dual charter, but they do not appreciate the regulatory and operational burden they’ve been placed under,” said John Radebaugh, president of the North Carolina league. “Clearly, credit unions want a resolution to this situation, and they are willing to reconsider their chartering status if the regulators can’t find a way to resolve their differences.”
The results reveal that 30% of the 39 credit unions responding to the survey are "very" or "somewhat" likely to convert to a federal charter if the situation is not resolved and the two examination structure is maintained in future years. An additional 38% of respondents say they are undecided about a potential charter switch, with less than a third (31%) responding that it is "unlikely" they will convert.
The vast majority of the respondents, 80%, said they are “very” or “somewhat” unlikely to convert charter if NCUA and the North Carolina CU Department resolve their differences and begin working together once again.
The survey results reveal some troubling conclusions:
• Left unresolved, the dual exam structure threatens to further erode the value of the state charter in NC.
• Conflicting examination findings and the lack of a working relationship between NCUA and state regulators have further complicated an already complex operational environment.
• The credit unions with the fewest staff resources and the greatest day-to-day operational challenges have been hit the hardest.
• The dual examination structure continues to place further regulatory and operational burdens on credit unions.
