I applaud State Employees Credit Union and the North Carolina state regulator for leading credit unions in the right direction. Disclosure of CAMEL ratings is the right decision for a whole host of reasons.
Credit unions can't claim member ownership and at the same time deny members critical information about the credit union's performance. Owners have a right to know the status of their credit union. They pay for NCUA oversight and should be able to hold NCUA accountable for the services they provide. CAMEL ratings may have their faults.
Disclosing CAMEL ratings will make them better and will give members critical information they need to hold boards and management accountable for the performance of their credit union. Credit unions who rely on third-party ratings (Bauer, Callahan's, Bankrate.com, etc.) should not object to having their CAMEL rating made public. Today, members only realize the extent of problems when a credit union is forced to merge or liquidate. For an industry that is "member centric" I find it disingenuous to deny members access to CAMEL ratings.
There is ample evidence in all of the recentCU failures that members were the last to know about the problems. Members are not now adequately aware of credit union performance. Audited financial statements are not a good indicator of future problems, they are a lagging indicator of problems. Audited financial statements say nothiing about management, the M in CAMEL, which is the best indicator of problems.
I agree that the CAMEL rating for management is its weakest rating, but disclosing CAMEL ratings will improve that. Disclosing ratings will also make NCUA accountable for its performance. Imagine what might have happened if the CAMEL ratings for WesCorp, Nolarco, Eastern Financial and any of the other failures were made public.
Time To Man Up
I urge the North Carolina credit unions to support the state regulator. Changing to a federal charter gives support to those who want to keep members in the dark and who don't want transparency. Credit unions should "man up" and accept disclosure of CAMEL ratings as a pro-member and progressive change that makes credit unions better, reduces share insurance fund losses and makes NCUA accountable and a better regulator.
Henry Wirz, CEO
SAFE CU, North Highlands, Calif.
