Paper

Development Best Practices in Credit Union Supervision: Supervision of Problem Credit Unions

How does an examiner solve the problems that credit unions face?
Download 8 pages

This paper argues that one of the most important job functions of a regulatory examiner is the supervision of problem credit unions. It states that examiners should help a credit union solve its problems before they:

  • Threaten the credit unions safety and soundness;
  • Cause a financial loss to the members;
  • Adversely affect the members' confidence in the credit union.

The paper discusses:

  • Off-site problem identification, the objective of which is to identify negative trends and emerging problems and to resolve issues before they become so serious that they could negatively affect the credit union's financial condition;
  • On-site problem identification, which, the paper claims, is the best way to identify and resolve a problem, whether it is emerging or evident for some time;
  • Supervisory tools for problem resolution, which encompass those actions that the regulatory authority can take against a problematic credit union in order to reverse negative trends or operational results, remove officials or take over management of a credit union;
  • Two kinds of assistance that the regulatory body could offer to selected credit unions - non-financial assistance and financial assistance.

The paper concludes with examples of prevalent problems and suggestions for their resolution.

About this Publication

Published