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September 25, 2008 - NASCUS’ second Board of Directors College was held September 24 at Michigan First Credit Union in Lathrup Village, Michigan. The event was well attended by credit union board members and management from Michigan and a few board members from other states. NASCUS hosted the college in conjunction with the Michigan Office of Financial and Insurance Regulation, the Michigan Credit Union League and Michigan First Credit Union.
Dennis Dollar, former NCUA chairman and principal partner of Dollar Associates, kicked off the day-long program by giving directors an overview of current credit union governance, including how governance has changed and the ways that it will continue to change in the future. Dollar also addressed various difficulties that credit union boards are currently facing in their institutions. Dollar finished his presentation with a list of 10 items that all credit union boards should be monitoring and the reasoning behind each one. The list included compliance, training and third party relationships.
Jenny Champagne, NASCUS’ Vice President of Regulatory Development and Education, presented on essential safety and soundness regulations including Bank Secrecy Act (BSA), member business lending (MBL) and the FACT Act provisions that are effective November 1. Champagne stressed that education for credit unions should include board member training. Champagne also recommended credit unions develop a red flags checklist for each department when creating their ID theft red flags program.
Mike Defors, Michigan Credit Union League Director of Regulatory Affairs, discussed evaluating third party relationships and the various responsibilities that fall to management and the board because of those relationships. Defors cited National Credit Union Administration (NCUA) Letters to Credit Unions, as well as supervisory letters, when explaining to directors the objectives of regulators and the importance of board involvement in third party relationship management. Defors stressed that boards should be able to discuss with examiners the assessment and decision making process that their CU’s use for oversight of third parties. That process should include three steps: a self risk assessment, due diligence of the third party and risk measurement, monitoring and control; all steps need to be documented.
The afternoon began with a presentation by Roger Little, deputy commissioner, and John Kolhoff, assistant director, of Michigan’s Office of Financial and Insurance Regulation. This presentation allowed directors to interact with their regulators in a non-examination environment. Little and Kolhoff spoke about board fiduciary, regulatory and safety and soundness duties. The duties were grouped in two categories: one, by whether the board is able to delegate the duties; or two, if those actions must remain at the board level. Little and Kolhoff gave directors a list of resources and also explained what they believe to be the most common board mistakes, including not asking questions and a failure to lead on ethics and compliance issues. Later, they walked attendees through how to read and understand an exam report and the possible regulatory actions that can accompany report findings. Little and Kolhoff finished by running through hot exam topics in the state of Michigan.
To close the college, Pete Crusius addressed how to proceed with Asset/Liability Management (ALM) during the current challenging economic conditions. Crusius explained how the real estate crunch, shrinking margins and other factors are making it tougher for credit unions to deal with ALM related issues. Crusius also gave board members a list of things that their credit unions can control when looking into ALM. Attendees were also given suggestions for ways that they should measure success during challenging times and how to create a strategic vision process for ALM.
NASCUS is planning another Board of Directors College in North Carolina. Check the NASCUS website for an upcoming announcement on the event.
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