Archive for January, 2012
Lending Links – NCUA Exam Updates and Student Loan Speculation
Without getting too deep into any particular topic, we wanted to share a couple of interesting articles with you.
Included in this week’s Credit Union Times was an article written by NCUA Chairman Debbie Matz titled “Expect More Due Diligence, Risk Management Scrutiny” which lists the areas NCUA examiners plan to look at more closely in 2012. At this point, these should come as no surprise to you. They include Concentration Risk, Long-Term, Fixed-Rate Real Estate Loans, Yield Focus, Indirect Loans and Loan Modifications. Good luck.
An interview with Mark Greene, CEO of FICO also just popped up on my Yahoo! Finance ticker titled “Student Loan Crisis Looms: FICO Risk Survey” where he notes 67% of risk managers believe that student loan delinquencies will rise in the next year. It makes sense. With the poor job market it has become much more acceptable to take more than four years to finish college and students are using loans to fund their lifestyles. The poor job market has not influenced students to focus on jobs that are still in demand in lieu of their dream job of dolphin trainer or archaeologist. The result is kids coming out of school in more debt and less income-producing ability. I think managing these loans may become a challenge in the months (years) to come.
-Dan Price, CPA
Twenty Twenty Blogger
Government Accountability Office Report on the NCUA – Why Credit Unions Fail
The United States Government Accountability Office (GAO) recently released its Report to Congressional Committees on the NCUA titled “Earlier Actions Are Needed to Better Address Troubled Credit Unions.” You can read the full report here.
The GAO’s criticisms focused on the NCUA’s Prompt Corrective Action (PCA) program and recommended “…additional triggers for PCA that would require early and forceful regulatory action…” The GAO’s recommendation was based on research showing that credit unions subject to PCA that did not fail were more likely subject to earlier PCA action. This means the NCUA is going to have to find a way to evaluate when these triggers are hit and supervise the PCA program for a larger pool of credit unions. If you were worried about how they were going to keep all of those new examiners included in the 2012 budget busy, you can rest easy.
