The Defense Credit Union Council, DCUC, wrote to the National Credit Union Administration (NCUA) in support of the agency’s proposed rule to codify the elimination of reputation risk from its supervisory and examination program.
DCUC expressed strong support for the proposed rule, noting sound policy improves the efficiency, clarity, and fairness of credit union supervision while aligning with recent executive directives aimed at preventing politicized or unlawful debanking.
The proposal would prohibit the NCUA from taking supervisory or adverse actions against credit unions based solely on reputation risk or on a person’s or entity’s lawful political, social, cultural, or religious views.
“Reputation risk is inherently subjective and difficult to measure consistently, which can lead to uncertainty and inconsistent supervision,” says Jason Stverak, DCUC Chief Advocacy Officer. “We commend the NCUA for removing reputation risk from its supervisory framework and for proposing to codify this change. We believe it promotes further transparency, predictability, and fairness while ensuring examiners remain focused on objective safety and soundness risks.”
In its comments, DCUC shared that its members operate in highly regulated environments and have extensive experience with NCUA examinations. DCUC agreed with the agency’s assessment that reputation risk lacks concrete metrics and can divert resources away from core financial risks such as credit, liquidity, and interest rate risk. DCUC also supported the proposed definitions of “reputation risk” and “adverse action,” stating they provide needed clarity for both examiners and credit unions.
DCUC encouraged the NCUA to pair the final rule with examiner training and industry outreach to ensure consistent implementation across regions.“We’re recommend that the NCUA issue clear written guidance, host an industry webinar following finalization of the rule, and create a centralized webpage summarizing recent supervisory and regulatory changes. Doing so will ensure credit unions have the assistance and support they need when it comes to compliance and implementation,” adds Stverak.
DCUC appreciates the NCUA’s responsiveness to prior industry feedback and its commitment to continued collaboration to strengthen the supervisory process while safeguarding fair access to financial services.