Monday, January 09, 2012 11:23:00 AM
WASHINGTON – The Government Accountability Office's (GAO) recent criticism of the NCUA’s oversight of the credit union system "offers state and federal regulators a valuable opportunity to evaluate current Prompt Corrective Action (PCA) standards," National Association of State Credit Union Supervisors (NASCUS) President/CEO Mary Martha Fortney said late last week.
The GAO examined the NCUA's response to 85 natural person credit union failures that took place between the start of 2008 and June 30, 2011, and faulted the NCUA's supervision of troubled credit unions, noting that the agency in some cases responded too late. The GAO noted PCA measures were not taken for 16 of the 85 failed credit unions, and said that PCAs, when used for the other failed credit unions, had limited opportunity to help the credit unions prior to their failure.
The GAO recommended the NCUA "consider additional triggers for PCA that would require early and forceful regulatory action and offer proposals to Congress on how to modify PCA, as appropriate." NCUA Chairman Debbie Matz responded to this recommendation, saying her agency would strengthen its existing enforcement program and develop new predictive PCA measures that identify emerging problems earlier.
NASCUS noted that the NCUA has been directed to work with state credit union regulators on PCA and other issues under the terms of the Credit Union Membership Access Act.
CUNA supports improvements in PCA that will not encumber well managed credit unions, and will urge the NCUA to tailor any solutions that might be developed as a result of the GAO report to problem areas only and to avoid the temptation to issue new regulations that cover all credit unions, regardless of their risk profiles.
Fortney said the NCUA and state regulators can also use this opportunity "to act on capital reform and supplemental capital for credit unions in an effort to modernize the archaic capital system for credit unions." CUNA hopes to work with the NCUA to pursue authority from Congress for credit unions to use supplemental capital.