Support for NCUA’s removal of reputation risk from supervision program
America’s Credit Unions voiced support for the NCUA’s proposed rule to formally eliminate “reputation risk” from its supervisory and examination program, noting the concept is ambiguous and lacks any measurable criteria and therefore is inappropriate to use as a risk factor. America’s Credit Unions had requested the exclusion of reputational risk in a letter to Chairman Kyle Hauptman in June.
In a letter sent Monday, Regulatory Affairs Counsel Tyler Maron said removing reputation risk would reduce regulatory burden, exam time, and costs—especially for smaller credit unions—and refocus exams on objective and measurable material financial and operational risks tied to safety and soundness.
Maron also affirmed that credit unions do not debank members based on protected speech or viewpoints and stressed that institutions must retain the ability to make risk-based business decisions without examiner interference. He urged the NCUA to ensure the rule does not allow examiners to penalize credit unions for policies and procedures that allow them to debank for risk-based reasons.
“We urge that credit unions must be able to continue to enact independent policies, procedures, and judgments without interference by NCUA examiners,” added Maron.