The Current Great Debate Has More to do with Lack of Debate

The more I talk with people off the record about the issues surrounding the idea of going back to an 18-month examination cycle, the more I find that the argument is less about the length of that cycle and more about the dialogue … or lack thereof.

When NAFCU and the Cooperative CU Association (aka the league that serves Massachusetts, New Hampshire and Rhode Island) suggested the agency extend its current exam cycle of 12 months, adopted in the wake of the financial crisis, Credit Union Journal reached out to NCUA for comment, and the response was quick an unequivocal: no can do.

Though I am a big believer in less-is-more when it comes to government and regulation, I can see the rationale behind this response. Yes, credit unions and the economy have made great strides since those dark days in 2008 and 2009. But these things are often cyclical, and it's more likely a question of when, not if, the next big crisis will come. Moreover, the market in which credit unions operate is only getting more complex, as are credit unions themselves.

So, I find NCUA Director of Examinations and Insurance Larry Fazio's arguments in favor of maintaining the 12-month cycle compelling. But I find the seemingly stark refusal to discuss the matter disturbing.

Because the thing is, the arguments in favor of reverting to an 18-month cycle are also compelling. And most compelling of all is the need for all stakeholders to be able to discuss this in a thoughtful manner.

Interestingly, several different sources have suggested that NCUA is not nearly as unwilling to give this matter due consideration as it would seem, saying that the letters from CCUA and NAFCU have prompted internal discussions of this matter. If nothing else, we know state regulators are talking with their federal brethren about this, as NASCUS CEO Lucy Ito told Credit Union Journal (see related story), though the association representing state regulators declined to outline those discussions.

There is something to be said for the fact that a steak cooks better on the grill if you're not always opening the grill up to check on it every few seconds. But the examination cycle is not a steak. And as Supreme Court Justice Louis Brandeis noted, there is no better disinfectant than sunlight.

Editor in Chief Lisa Freeman can be reached at lisa.freeman@sourcemedia.com.