The bill requires federal financial regulators to produce examination reports within 60 days of an examination's completion. In addition, if the financial institution wants it, the agency must include an appendix to the report listing all the facts that were used as a basis for the conclusions.

The Capito-Maloney bill also mandates that the NCUA and other agencies cannot put a commercial loan in nonaccrual status just because the collateral has decreased in value. It also requires the regulator to remove a modified or restructured commercial loan from nonaccrual status if the borrower demonstrates that it can regularly repay the loan.

Capito and Maloney are, respectively, the chairman and ranking Democrat on the House Financial Services Committee's subcommittee on financial markets and consumer credit. The panel is planning to hold a hearing on the bill on December 6.

“We have heard significant concerns about the fairness of the examination process for financial institutions and their ability to effectively appeal regulator decisions. This legislation provides financial institutions with a fair and impartial process to appeal examination reports for federal financial regulators and providing further clarity to regulators,” Capito said in a statement.

Truliant FCU President/CEO Marc Schaefer said the NCUA and other regulators were caught off guard by the financial crisis and in some cases went too far the other way to compensate for their mistakes. But he expressed concern that trying to solve the problem politically could have unintended consequences.

“The intent sounds good but you have to be careful about whether changes have the unplanned result of making the NCUA or other regulators weaker. Healthy credit unions want the NCUA to be diligent,” said Schaefer, whose Winston-Salem, N.C-based credit union has assets of $1.1 billion.

NCUA Director of Public and Congressional Affairs Todd Harper said the agency is reviewing the bill and doesn't have a position on it yet. He noted that in June, Matz wrote in her column in the agency's newsletter that there is an extensive appeals process in place within the NCUA if credit unions are dissatisfied with the results of their examinations. She also noted that the agency has a strictly enforced policy that forbids retribution against credit unions that appeal their examinations.

Lobbyists for CUNA and NAFCU praised the measure.

CUNA Senior Vice President Ryan Donovan said there is “much for credit unions to like in the bill.” He added that giving credit unions more information about the basis for certain examination findings and increasing the opportunities to appeal examinations will be helpful.

NAFCU Vice President Brad Thaler said while they are still reviewing the bill, there is much in it that will be favorable for credit unions.

State Employees of North Carolina Credit Union President/CEO Jim Blaine said he would like the NCUA and state examiners to give credit unions more flexibility to offer nontraditional products that will help their members. Having more avenues for credit unions to appeal regulators' decisions might cause examiners to be more flexible.

“You don't want to do anything that jeopardizes safety and soundness. But for credit unions to be able to compete with banks they need to be able to offer nontraditional products because when it comes to traditional products, banks will always beat us on price because of scale,” Blaine said. “We want regulators to look more favorably upon innovative products.

Blaine's Raleigh, N.C.-based credit union has assets of $22 billion.