Credit Unions Say Regulator Goes Overboard

The usually harmonious relationship between the credit union industry and its chief regulator has been shattered.

Ralph Swoboda, president of the industry's main trade group, recently accused the National Credit Union Administration examiners of repressive sanctions, procedural lapses, and inconsistency in applying standards. In short, he and others are saying the regulators are repeating the mistakes of their banking agency cousins.

"The reason for having an independent regulator in the first place is to provide a different approach to supervision." Mr. Swoboda declared in a recent speech in Florida. "Treating us like banks destroys the whole rationale for NCUA's existence."

NCUA Chairman Roger Jepsen, in a speech last weekend in Portland, Ore., said industry officials were overreacting. "I've even received an anonymous note accusing the agency of Hitlerlike tactics and telling me my days are numbered," he said.

In an internal newsletter for agency staff members, Mr. Jepsen said most complaints about examiners are "based on emotion rather than facts."

William Hampel, the trade group's chief economist, said in an interview on Monday that members are complaining about "really aggressive examiners" who are requiring them "overnight to change the entire policies and procedures of the credit union."

The trade group, the Credit Union National Association, is taking its members' complaints seriously. It recently asked them to complete a new form describing "unusual incidents or experiences" that have occurred during recent exams.

Detailed Survey Planned

In the last week of October, the group will conduct a national membership survey "to get [an] in-depth look at credit unions' experiences and attitudes toward examinations."

In an upcoming issue of Credit Union Magazine, trade group spokesman Larry Blanchard asserts that examiners "rewrite the rules to suit themselves."

He cites 10 alleged abuses, including on-the-spot demands for executives to sign regulatory agreements without legal advice; lobbying of board members to oust credit union managers; and refusal by examiners to document oral instructions.

In an interview last week, Susan Nelowet, Mr. Jepsen's special assistant, challenged the trade group to provide names, dates, and places to verify its charges.

"When the facts bear out what they are saying, we'll take action," she said. "Our examiners have a tough job, and we support them."

Some Fear Retaliation

She conceded only that NCUA's 660 examiners are bound to make some mistakes each year in the course of performing 10,000 exams.

CUNA, for its part, says its members fear retaliation from accused examiners.

Ms. Nelowet called that an empty cry.

In a speech planned for CUNA's annual convention in Opryland on Oct. 8, Mr. Jepsen, a former senator from Iowa, will try to calm the waters. Why is the industry so upset, he will ask, when credit union profits are holding steady and congressional concern is light?

Mr. Hampel, the trade group's economist, said credit unions generally agree with examiners' diagnosis of problems but flinch at the dictated cures.

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