Federation Board meets with NCUA
The Federation's Board of Directors met in Washington on February 22-24, 2003 taking advantage of their time in the nation's capital to meet with each of NCUA's board members.
Federation Chairwoman Rita L. Haynes (Faith Community United CU in Cleveland, OH) led a wide-ranging discussion with the NCUA board members that highlighted a number of issues.
- Non-member deposits. Federation leaders urged NCUA to drop the 1988 regulation limiting the use of non-member deposits by low-income credit unions. The Federation's argument: controlling deposits through a special regulation is unnecessary because NCUA has many enforcement tools available through Prompt Corrective Action (PCA).
- Lack of perspective in risk-focused exams. A number of CDCUs report that examiners are using the introduction of the new exam procedures to bear down on every possible area of risk, regardless how remote, and imposing strict time deadlines regardless of a credit union's other urgent tasks. As one Federation Board member put it, "A two-week deadline for kidnapping prevention policies, at a time when we were moving our offices? Now, really!"
- "Catch-22" for CDFI Fund awards. Disbursement of some awards won by CDCUs from the highly competitive CDFI Fund have been held up because NCUA examiners cited weaknesses in the credit union awardees' operations. In fact, receiving the awards would have enabled the credit unions -- some of which are officially "well-capitalized" -- to rectify problems. The Federation called on both NCUA and the CDFI Fund to work more closely together.
- NCUA restrictions on mortgage lending; intervention into CDCU board matters. Despite NCUA's strong desire to expand service to the underserved, some examination practices continue to contradict the NCUA board's philosophy. One CDCU, which serves a very-low-income Hispanic population, complained that the examiner was demanding the credit union limit itself to 80% loan-to-value mortgage loans, even though most low-income people cannot meet this standard -- and even though the credit union had won a CDFI Fund award to mitigate the risk of high loan-to-value mortgages.
- The Federation's strong opposition to changing the definition of "low-income." Reportedly, some credit union representatives are seeking to raise the ceiling on the official definition of "low-income," in order to allow more credit unions to access the powers not restricted to low-income CUs. While the Federation remains supportive of efforts to expand key powers to other segments of the credit union movement (e.g., caps on small-business lending, alternative capital), the Federation's Board was united in its opposition to any attempt to dilute the standard for low-income and thereby render it meaningless.
NCUA Proposed Field of Membership Policies:
Please click herefor the Federation's comment letter
To visit NCUA's website, click here.