JetStream CEO Jeanne Kucey and West Virginia League CEO Ken Watts.

The House subcommittee on Financial Institutions and Consumer Credit held a hearing Wednesday Feb. 1 on H.R. 3461, the Financial Institutions Examination Fairness and Reform Act. The legislation is designed to help the examination process for financial institutions. The subcommittee hearing consisted of two panels, one for regulators, including NCUA Executive Director David Marquis and another for financial institutions, which included JetStream FCU CEO Jeanne Kucey and West Virginia Credit Union League CEO Ken Watts.

Kucey told the subcommittee about the mission for credit unions and the fundamental differences between a credit unions and a bank. She told the committee that "Credit unions were not the cause of the financial crisis, yet often feel the effect of punitive measures designed to reel in the practices of bad actors and other financial institutions." Kucey explained that a consistent process will help financial institutions, "maintaining a consistent supervisory and examination environment is vital to ensuring compliance with both safety and soundness.....changes in regulation, the standards by which a credit union is evaluated during examinations should not change from examination to examination."

The NCUA's David Marquis testified that regulators must be able to take action to mitigate risks during tough economic times. He said the NCUA encourages communications with stakeholders and they have an open-door multi-layered appeals process. Marquis said that the bill could have unintended consequences such as increased costs due to the appeals process; a cost that would increase costs to credit unions.

West Virginia's Ken Watts testified that, "a proposed financial institutions examination reform bill would help strengthen the safety and soundness of the financial system by increasing the consistency and fairness of financial institution examinations."

CUNA submitted a letter to the subcommittee supporting the legislation, calling it a firm step in the right direction toward ensuring that the federal regulators conduct fair exams which are consistent with the law and regulation and ensure safety and soundness. Click here to read the letter.

You can listen to the hearing testimony by clicking here.