NAFCU Journal November December 2021

20 THE NAFCU JOURNAL November–December 2021 “NCUA would issue guidance that examin- ers used as de facto lawmaking—a move that bypassed the lengthy rulemaking process and did not allow credit unions to comment on consequences or value of the rule,” said Kossachev. “In January 2021, the NCUA, along with other federal financial regulators, codified the differ- ence between regulations and guidance, saying that supervisory guidance creates no binding obligation on the credit union, but can be referred to as a best practice.” Since January, Kossachev revealed she has not heard from NAFCU-member credit unions who have experienced an exam- iner that has used guidance as a rule. Room for Further Improvement There could still be improvement in how examiners share best practices, said Keith Sultemeier, CEO of Kinecta Federal Credit Union. “When an examiner offers supplemen- tary guidance, or best practices, we treat that information the same way we treat findings—we address it,” he said. “If an examiner has specific best practices that are typically recommended, we’d like to receive it beforehand, which would give us time to evaluate it to determine if it is applicable to our organization and would benefit our members.” He also pointed out that there are times when the credit union already has pro- cesses or programs in place that accom- plish the same goal, just do it differently. “Having the ability to review it before the examiner visits would save time and resources for everyone,” he added. “I would like to see financial regulators be clear about their boundaries, especially when there is overlap between regulatory and legislative issues,” said Lisa Schlehu- ber, CEO, Elements Financial. An exam- ple of recent overlap was found through the NCUA’s creation of a separate con- sumer protection exam for certain larger credit unions. “Protecting consumers is a fabulous goal, but having multiple regu- lators approach it from different perspec- tives just muddies the waters and makes it difficult for credit unions to understand what constitutes compliance.” There is also a lack of transparency related to “gray” areas that require sub- jective interpretation—which can vary from region to region, said Schlehuber. Credit unions that operate in multiple regions of the country face the challenge of the same rule being interpreted slightly differently in each area, she explained. “We need consistency in the interpreta- tion across the continuum to eliminate as much subjectivity as possible.” Clear Communication Needed Other areas that need improvement include the NCUA budget and the NCUA’s communication strategy with credit unions, said Kossachev. Because credit unions provide the funding for the agency, the NCUA should let them know how the money is used, she said. “Even though credit unions have been consolidating, the NCUA budget consis- tently increases,” she said. “The funds sent to NCUA represents money that cannot be used to serve members.” In September, the NCUA responded to NAFCU’s request for a mid-year budget update. “This update creates more trans- parency about the use of NCUA funds to support the industry, and the associ- ation will continue to monitor agency spending,” said Kossachev. “We have also asked that the upcoming budget reflect lessons learned last year as a result of the pandemic and travel restrictions,” she said. “Exams were conducted virtually in 2020, and we all learned that they worked.” While NAFCU members appreciate the face-to-face interaction with examin- ers, the money saved on travel costs raises the possibility of hybrid versions of exams—alternating in-person and virtual—or other approaches that ensure the best use of credit union funds, she proposed. In a recent request for information (RFI), the NCUA asked for feedback on communications issues. Some of these issues include the sheer volume of mes- sages from the agency, said Sultemeier. “We were receiving messages from as many as nine different sections of the agency—all on different letterheads and many of them marked as urgent,” he said. “When most emails are marked ‘import- ant’ or ‘urgent,’ you become immune to the heading and treat them all as routine.” When an examiner offers supplementary guidance, or best practices, we treat that information the same way we treat findings—we address it... Having the ability to review it before the examiner visits would save time and resources for everyone. KEITH SULTEMEIER, CEO OF KINECTA FEDERAL CREDIT UNION