Sen. Toomey Presses NCUA's Harper on New Examination Rollout

Sen. Pat Toomey, the new ranking Republican on the Senate Banking Committee is pressing NCUA Chairman Todd Harper to ensure that the agency’s new examination system is implemented as soon as possible.

“A new resource for credit union examinations is long overdue as the financial services marketplace has drastically changed since the system was last updated over 25 years ago,” the Pennsylvania senator wrote in a letter to Harper this week.

The NCUA has said that full implementation of the system, known as the Modern Examination and Risk Identification Tool (MERIT) has been delayed until this year as a result of the coronavirus crisis.

The political dynamic is intriguing. In the last Congress, Republicans held control of the Senate and Republican Rodney Hood was the NCUA chairman. During that period, then-ranking Democrat on the Banking Committee — Sherrod Brown of Ohio — pushed Hood on several issues. Now, Democrats control Congress and Brown is committee chairman. And Democrat Harper is the NCUA chairman.

In his letter, Toomey said it is important that MERIT be rolled out as soon as possible, even if training is done virtually. He said he understands that more than $40 million has been spent on developing MERIT, adding, “After such a considerable investment of time and money, it is reasonable to ask when this initiative will finally come to fruition.”

Toomey also asked Harper to accelerate the agency’s Virtual Examination Project, saying that “adopting efficiencies and off-site examination capabilities is as important as ever.”

Toomey said he believes that MERIT and the Virtual Examination Project will provide credit unions with flexibility and simpler examinations without sacrificing safety and soundness.

Finally, Toomey asked Harper to expand upon his comments that a Share Insurance Fund premium is going to be needed. At the February NCUA board meeting, Harper said it is “increasingly clear the question is no longer if we have to assess a Share Insurance Fund premium, but when and how much.”

In its annual Strategic Plan, the NCUA said MERIT will be released to all credit union examiners this year. Agency officials said that was supposed to occur in 2020 but was delayed by the pandemic.

In its 2021 budget, the agency said in 2019, MERIT was released as a pilot to the Office of National Examinations and Supervision and to state regulators in North Carolina and Washington. An extended pilot was implemented in September, agency officials said, adding that the program will be available to all system users in the third quarter of this year.