NCUA's Examination Cycle Changes: More Show Than Substance
NCUA's 2025-2026 budget proposal outlines examination cycle modifications:
- Credit unions ($1-10B assets) with CAMELS 1/2 ratings and stable leadership: 12-16 month cycle
- Larger institutions (>$10B) and higher-risk entities: 8-12 month cycle
- Most federal credit unions: 12-18 months (reduced from 14-20)
- State-chartered credit unions: Nominally every five years (loosely enforced)
The Reality Behind the Numbers
NCUA claims 21,000 annual examination hours saved through eliminating 10 examiner positions. Let's examine the math:
Standard examiner workload:
- Annual hours: 2,080 (52 weeks × 40 hours)
- 10 positions = 20,800 total hours
- Actual examination time: ~1,000 hours per examiner
- Real savings: 10,000 examination hours (10 examiners × 1,000 productive hours)
Impact on eligible credit unions:
- 420 credit unions between $1-10B assets
- ~336 eligible after excluding higher-risk institutions (20%)
- Average relief: 29.76 hours per credit union annually
- Practical effect: Minimal delay in examination timing
The Hidden Truth
This appears to be policy alignment rather than meaningful reform. Like airlines padding flight times to improve on-time statistics, NCUA is adjusting policies to match current practices rather than implementing substantive changes.
With NCUA following their own policy only 67% of the time for CAMEL 3 ratings and 80% for CAMEL 4s, compliance for CAMEL 1s and 2s likely shows similar deviation. Before the industry offers a standing ovation, consider: this may simply formalize existing practices while redistributing examiner positions to non-examination roles.
To echo Van Morrison: What's the sound of one hand clapping? In this case, it might be the sound of regulatory theater.
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