Here's a blog post that captures the key insights while providing value to credit union professionals:
The Hidden Meaning Behind "Agreed Upon Corrective Action" in NCUA Exams
When a credit union receives its NCUA examination report, right there on the cover page sits an important phrase: "This report documents our conclusions and agreed upon corrective actions." But what happens when these actions aren't actually agreed upon at all?
A Reality Check from the Field
Recently, I received a call from a small credit union facing a frustrating situation. Their examiner had completed the review, left some findings, and then... silence. Weeks later, a "final" report appeared in their inbox, complete with changed CAMEL codes and new requirements - all without any opportunity for discussion or input.
This scenario raises a fundamental question: How can something be "agreed upon" if one party never had a chance to agree?
The Definition Matters
The term "agree" has specific meaning: to come to one opinion or mind, to reach an arrangement or understanding, to arrive at a settlement. This definition implies a two-way conversation, not a one-sided directive.
The Modern Examination Challenge
The current NCUA examination process includes higher levels of supervisory review - a well-intentioned change designed to ensure consistency. However, this additional layer of oversight can sometimes create unintended consequences:
- Extended periods between draft findings and final reports
- Year-end pressure to complete examinations
- Reduced opportunity for direct dialogue
- Changes made at the supervisory level without credit union input
Your Rights and Options
If you find yourself receiving a "final" report without proper consultation, you have options:
First, understand that the examination report's second page outlines your right to "immediate dialogue." While this becomes more challenging when a report arrives as "final," the right remains.
Second, consider pushing back through appropriate channels. Start with your examiner, then move to the supervisory examiner if necessary. Even with well-seasoned examiners, there's often room for constructive dialogue about report language and findings.
The Art of Strategic Response
Credit unions often face a delicate balance between "going along to get along" and advocating for their interests. When deciding how to respond to examination findings, consider:
Safety and Soundness: If the issue truly impacts safety and soundness, NCUA will likely stand firm. However, they should still provide an opportunity for dialogue about how to address the concern.
Language Refinement: Often, there's room to adjust report language to better reflect reality while still addressing NCUA's concerns. This can make a significant difference in how findings impact your credit union's operations.
Factual Corrections: If there are factual errors, these should always be addressed, regardless of how high up the report has gone for review.
A Path Forward
The examination process works best when it truly reflects its intended nature - a collaborative effort to ensure credit union safety and soundness while serving members effectively. This requires:
- Open dialogue between credit unions and examiners
- Opportunity for meaningful input before reports are finalized
- Recognition that "agreed upon" means exactly what it says
- Balance between regulatory requirements and operational realities
Taking Action
When facing examination findings, remember:
1. Read your examination report carefully, including the standard language on the cover page
2. Document all communication attempts and responses
3. Be prepared to escalate professionally when necessary
4. Focus on finding solutions that work for both your credit union and NCUA
The Bottom Line
"Agreed upon corrective action" isn't just a phrase - it's a commitment to collaborative problem-solving between credit unions and their regulator. When this process breaks down, credit unions not only have the right but the responsibility to speak up. The goal isn't to avoid necessary changes but to ensure those changes truly serve the interest of credit union members while maintaining safety and soundness.
Remember, effective regulation requires both oversight and dialogue. Your credit union's voice matters in this process, even if you sometimes need to speak up to be heard.
[Author bio: Mark Treichel is a former NCUA executive and host of the With Flying Colors podcast, helping credit unions navigate regulatory challenges while maintaining operational excellence.]
Comments