WASHINGTON — CUNA is urging NCUA to expand the technology used during credit union examinations as part of a push to streamline the process and save money.

In a letter to NCUA in advance of the regulator's November board meeting, the trade group highlighted a number of areas it said the agency's budget could be improved, including finding savings by modernizing examinations.

"We're not suggesting that we're the technology experts," CUNA's SVP and Deputy General Counsel Mary Dunn said in an interview with Credit Union Journal. She pointed to a $100 million CU mentioned in the letter, not identified by name, that hosted a dozen examiners for a week, despite being well-capitalized.

"Isn't there something with technology that would allow you to do that more efficiently?" Dunn asked. "This doesn't seem to be an isolated case; we are still hearing from a number of credit unions that feel the number of examiners seems to far exceed any problems that might be at the credit union."

CUNA's letter doesn't go into specifics, but one idea Dunn floated was the possibility of uploading an institution's information to a secure, central site such as the NCUA regional office.

"This team of examiners can sit together, go over the information together, get on the phone if necessary, and then if there's more that they need to look into, then perhaps that can be done on-site with fewer people," she said. Dunn also suggested the possibility of using conferencing services like Skype or GoToMeeting.

"I'm not going to sit here and say that I or CUNA have all the answers," she said. "We're not the examination board and we truly don't want to micromanage NCUA. But when the budget just keeps going up and up every year, looking for any way that would minimize the cost and maximize the efficiency, we just feel that it's important for the agency to do so."

Dunn also suggested the possibility that NCUA, the FDIC and other regulators make modernization a priority with the FFIEC, "so it's not just NCUA going it alone."

An 'Army' of Examiners?

NCUA spokesperson John Fairbanks told Credit Union Journal in an e-mail that the regulator "is currently designing and developing a new examination program aimed at providing examiners with state-of-the-art analytical tools," but did not expand beyond that.

At the state supervisory level, Sabrina Bergen, NASCUS regulatory and public policy council told CU Journal that the state supervisors' association continues to view technology as an important component of the examination process, including its ability "to ease unnecessary regulatory burden."

NASCUS has worked both with state regulators and NCUA, she added, "in numerous initiatives to leverage improvements in technology to streamline the supervisory process in a manner that is cost effective and secure while maintaining effective oversight of the nation's credit union system."

CUNA's Dunn was quick to note that anytime the trade group makes suggestions about improving examinations, those comments are always directed toward state regulators as well as NCUA. CUs facing examination from both regulators can "get a whole army of [examiners] sometimes. There can be inconsistences in the messaging you get from state versus federal — different priorities," she said. "We're not trying to say that every little problem means that NCUA has to make major changes, but the examination process still needs to be scrutinized and reviewed to see how it can be improved."

For its part, NAFCU's SVP of Government Affairs and General Counsel Carrie Hunt said in a statement that the trade group for federally chartered CUs supports "any measures or new tools NCUA might implement to better streamline the exam process, ensure it is carried out in a consistent, fair manner, and doesn't unduly strain NCUA's or the credit union's resources and staff."

NAFCU also wrote a letter to NCUA in advance of the board meeting, but did not mention the examination process.

Travel Concerns

Elsewhere in its letter to NCUA, CUNA also calls for the regulator to find ways to reduce its travel costs — the second-highest budget expenditure, at 11% of the total.

Dunn said the two issues are "interrelated but separate." While the trade group has larger concerns about the agency's travel budget, it relates to the tech push, according to Dunn. "[B]ecause if they can utilize technology more, perhaps people could do more outside of the credit union without disrupting the operations of the credit union."

She emphasized that CUNA is not saying NCUA should suspend making on-site visits to credit unions, since examines often learn things through on-site visits that they can't learn any other way. However, the trade group hopes that technology could reduce the number of in-person visits.

CUNA's letter was purposefully vague on specifics, according to Dunn, "because NCUA really holds all the cards in terms of the examination process." The letter also doesn't get into any details on the what it might cost to implement these modernizations or potential savings — in part, she said, because the idea is still developing and no one has built those costs out yet.

"It all boils down to what does the agency actually implement," she said. "If we just keep adding on examiners, we know that's not the way to go."

This isn't the first time CUNA has pressed the regulator for ways to streamline exams, but Dunn said that the ball is in NCUA's court as to whether or not the issue moves forward.

"For us, the road ahead would be for NCUA saying ‘We are going to look into this. Maybe at the end of the day there isn't anything more that we can do, but we're going to take a look at it.,'" she said, adding: "We want a signal that NCUA is willing to roll up its sleeves and look at how to squeeze every nickel while still serving its full capabilities to supervise for safety and soundness."

Some Praise For the Regulator

While CUNA's letter had plenty of critiques for NCUA in advance of the budget meeting, Dunn went out of her way to offer a bit of praise for regulator.

"Every mid-year the agency readjusts its budget, and often it's downward by an order of $1 million," she noted. "Out of a $250 million or $260 million budget, it's not a lot — but it is something. We want to encourage the agency to look for ways it can bring the budget down, but we don't want to overlook it when it's done."

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