Linda McFadden, president/CEO of the $154 million XCEL Federal Credit Union in Bloomfield, N.J., told a congressional committee Tuesday that many credit unions are afraid to bring their regulatory concerns to the NCUA.
“They came out with a [risk-based capital] proposal that was so off the wall that they knew it was going to cause a stir within the credit union movement,” McFadden said at a Senate Banking, House and Urban Affairs committee hearing.
Instead of getting credit unions involved in the process, making adjustments and re-proposing the rule, McFadden said the agency is doing everything alone.
“That's not a collaborative working environment. So when they draw lines in the sand like that, credit unions are afraid to come forward and take their issues to the NCUA because they know they are very closed minded about it,” McFadden, who testified on behalf of NAFCU, told Sen. Jerry Moran (R-Kan.).
She also questioned why the agency has not used its waiver authority for member business lending.
“They have the ability to use a waiver for member business lending. They don't exercise that right. That's just one of the number of things that they have at their disposal that they just fail to use,” McFadden said.
“They have those tools in their toolbox but they never pull them out, or if they do, the waiver process is so complicated and so long, I've lost that member business loan before I ever had a chance to book it because the process took too long,” she added.
CUNA Chairman Dennis Pierce, president/CEO of the $2 billion CommunityAmerica Credit Union in Lenexa, Kan., said the NCUA's proposal does not properly evaluate the risk-based nature of capital.
“It doesn't include access to supplemental capital or other resources that I think would be a great add for credit union members so I think they try but I don't think they get there,” he said.
Larry Fazio, director of the Office of Examination and Insurance at the NCUA, told the committee on Tuesday the NCUA should have examination and enforcement authority over third party credit union vendors.
“They're not only examining once, but they're examining it with every credit union that uses that CUSO, so why do they need to overstep the bounds and go into that entity and review them again. Is not reviewing them five or six or 10 times not sufficient?” McFadden said.
Piece said most third-party vendors do not pose a huge risk to credit unions.
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