The recently released Interagency Statement Clarifying the Role of Supervisory Guidance is more pablum from agency leaders on Duke St., which will likely conflict with actual examination practices out here on Main St. The history of NCUA communication between national headquarters and the field staff more closely resembles the old party game of “telephone” as any directive flows downhill from D.C.
I hope that more CU CEOs and Boards will fearlessly and forcefully argue for those strategies and solutions that they have created for the benefit of the members they serve that are within the powers granted them but in conflict with “supervisory guidance.” A supervisory agency would prefer that every institution they evaluate look identical, have the same product mix, practice the same pricing strategies, and exercise the same propensity for risk. It makes their supervisory job easier and simplifies the management of an insurance fund that acts more like a “rainy day fund” than real insurance that recognizes and prices the variety and level of risks that credit unions need to assume to meet the needs of diverse, unique and complex fields of membership.
The most common problem experienced by any federally chartered or insured credit union is the inconsistency between what we hear from NCUA headquarters and what we are often told on the local level. I have no doubt that this Interagency Statement will create more than a few conflicting situations in CEO offices and CU board rooms.
What credit unions should demand from their supervisory agency is a level of managerial and communication skills that would make this Interagency Statement unnecessary. Every credit union should be required to be able to fully explain the strategic and tactical reasoning for any product, program and delivery system during the examination process. Every NCUA employee should be equally expected to clearly define the difference between exceptions due to statute or regulation and opinion based on perception. In fact, while I appreciate this explanatory statement to credit unions I think the primary audience for this information should be NCUA staff, national, regional and local examiners.