Regulator's retirement could help resolve credit union dispute

U.S. agency sees chance to end dispute

dranii@newsobserver.comNovember 15, 2012 

The upcoming retirement of the state’s top credit union regulator could pave the way to resolving a testy dispute with a federal agency that has frustrated roughly half of the state’s credit unions, which have been caught in the middle.

Jerrie Jay, 65, the administrator of the N.C. Credit Union Division, has announced she is retiring at the end of the year after 18 years on the job.

“I think I’m the longest-running administrator in the history of North Carolina,” Jay said. “That ought to tell you that it was long enough.”

Jay has been at the center of a clash with the National Credit Union Administration over her decision to allow the State Employees’ Credit Union to publicly disclose a previously confidential financial rating it received from state examiners. Now that she’s retiring, a spokesman for the federal agency, John Fairbanks, said in an email message, the agency could revise its position “after having an opportunity to meet with the new Credit Union Division administrator. We are hopeful that we can return to a productive, cooperative relationship with the N.C. Credit Union Division.”

“We’re optimistic that the state and federal (agencies) are going to work something out and move forward,” said Dan Schline, senior vice president of association services at the N.C. Credit Union League, which represents the state’s more than 90 credit unions.

Jay has said her decision in 2010 to permit the State Employees’ Credit Union to disclose the financial rating was an experiment in transparency. SECU hasn’t sought permission to disclose subsequent ratings.

The federal agency took umbrage at the disclosure, claiming it violated federal law – even though a state rating was at issue – and argued that there are sound public policy reasons for keeping such rankings confidential. Jay countered that transparency is a virtue and noted that she had confirmed with the state Attorney General’s office that she had the authority to pull the veil from the ranking.

The dispute has had negative implications for North Carolina’s state-chartered institutions, which account for roughly half of the credit unions statewide.

The reason: The federal agency was so outraged by Jay’s action that it decided to conduct its own comprehensive examination of the finances and policies of North Carolina’s state-chartered credit unions, rather than follow its usual custom of piggybacking in most instances on the exams conducted by state regulators.

The federal agency doesn’t regulate state-chartered credit unions, but it provides them with deposit insurance, and has the authority to conduct exams to ensure the soundness of the insurance fund.

Jack Braswell, president and CEO of Winston-Salem-based Members Credit Union, called the double dose of exams “foolish. It’s a waste of everybody’s money and time.”

An N.C. Credit Union League survey found that the reviews often lasted 10 days and consumed more than 40 hours of staff time, not counting follow-ups to resolve lingering questions. For the smaller credit unions – more than half of those affected average just six employees – it was particularly burdensome.

NCUA Executive Director David Marquis has insisted on assurances from state officials that confidential ratings of North Carolina credit unions won’t be released in the future. So the agency is seeking such a pledge from Jay’s successor before ending the hostilities.

“We want to return to the status quo that existed before the administrator took her action,” Fairbanks said.

Under state law, it’s up to the state Secretary of Commerce to appoint a successor. But traditionally the Commerce Secretary consults with the governor before making that appointment, Jay said.

With Gov. Bev Perdue a lame duck, Schline said, “the timing of when a new administrator is appointed is up in the air.”

Commerce Department spokesman Tim Crowley wasn’t forthcoming when asked about the timeline for naming a replacement. “We are currently developing the plan for a successor,” he wrote in an email.

Fairbanks said the feds are looking at beginning a new round of examinations – on top of the state exams – in the first quarter of next year. But the agency could revise its plans after meeting with the new administrator.

Ranii: 919-829-4877

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