On July 24, 2025, the NCUA held its first meeting since the recent reinstatement of Board Members Harper and Otsuka. Board member Harper attended the meeting virtually, and Board Member Otsuka attended in person. The Board was briefed on three matters: artificial intelligence, an overview and update from the NCUA’s Office of the Ombudsman, and the Central Liquidity Facility.
Artificial Intelligence
Much of the briefing on AI focused on credit unions’ and the NCUA’s use of AI. The NCUA encouraged credit unions to explore AI use cases while also considering:
- AI should be treated like any new product or service.
- Compliance with all applicable rules and regulations remains essential.
- Credit unions must conduct adequate due diligence, particularly when working with third-party AI vendors.
NCUA’s Internal Use of AI:
- Actively identifying high-utility use cases, including:
- Graphic generation, language translation, cybersecurity, coding, call report error detection, and supervisory stress testing.
- Updating internal policies to ensure responsible use of AI.
- In line with OMB Memo M-25-21, NCUA has published its AI Compliance Plan and Use Case Inventory at ncua.gov/ai with updates to follow.
Also discussed was a recent GAO Report, GAO-25-107197 Artificial Intelligence: Use and Oversight in Financial Services. The report identified several key areas for improvement that were discussed in the board briefing, including:
- The report identified a lack of model risk management guidance at the NCUA.
- The report recommended that NCUA update and expand guidance for staff and regulated entities.
- NCUA reviewed the issue and determined that focusing solely on model risk management is insufficient.
- A formal rulemaking process would be necessary to establish expectations.
NCUA AI Resources & Regulatory Activity:
- NCUA is developing an AI resource webpage and plans to launch it soon.
- The Agency is seeking input from credit unions and their members to understand how AI is being used and what support is needed. The Agency is specifically seeking public input on:
- How can NCUA provide more regulatory and supervisory clarity?
- What specific laws, regulations, or requirements may be preventing or dissuading credit unions from using AI for specific use cases?
- Responses may be submitted to AskNCUA at https://ask.ncua.gov.
Board Member Insights:
- AI may assist in future exam processes, especially in analyzing large datasets to identify risks. This would be a shift toward data-driven approaches amid staffing reductions.
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- Internally, the NCUA is exploring the use of AI to enhance navigation and efficiency through tools such as user guides.
- Examiner Considerations:
- It was discussed that examiners will review AI vendor compliance with rules, data handling, and transparency.
- AI training is being incorporated into information services training, with access to external resources and FFIEC programs as needed.
- The Board emphasized:
- AI must be used responsibly and in compliance with laws.
- Data accuracy remains critical.
- The use of technology does not absolve credit unions of regulatory risk.
- Encouraged both credit unions and members to share feedback on AI use and effectiveness.
Office of the Ombudsman Overview
The Office of the Ombudsman provided an overview of the purpose and programs of the Ombudsman’s Office. The briefing also discussed observations obtained from the 2024 post-examination survey findings.
The Ombudsman has two key programs:
- The Case Management & Data Analysis Program and the Stakeholder Outreach Program continue to be core functions.
- In 2024, the Ombudsman’s office received 598 inquiries, mostly related to examinations and consumer complaints.
Stakeholder Engagement:
- Ongoing participation in activities to raise awareness of the Ombudsman office and its services.
- Key outreach tool: Post-Examination Survey for federal charters, launched in September 2021.
- Now managed by an external vendor.
- Focuses on four areas: pre-exam, exam procedures, communication, and exam reports.
- The 2024 response rate was 52%, although overall participation is trending downward as EIC participation increases.
- Regional Survey Insights:
- Eastern: stable participation
- Southern: slight increase
- Western: lowest participation, likely due to fewer federal charters
- Many state-chartered CUs asked to participate despite not being targeted
Examiner Feedback & Trends:
- Hybrid exam work poses challenges—on-site exams are generally smoother than remote ones.
- Feedback from small credit unions (<$100M in assets) highlighted a need for greater NCUA guidance on overdraft programs.
- 94% of survey responses were positive; however, 41% cited duplicate requests from NCUA as a concern.
In response, particularly to the concerns over duplicate requests for exam documentation, the office of Examination and Insurance has developed several action items, including:
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- Modifications to the MERIT examination system
- Researching potential system enhancements
- Exploring AI tools
- Improving secure file sharing/transfer setup, templates, and procedures
- Develop external-facing webpages with guidance for credit unions
- Reaffirm agency policy and update internal examiner guidance
- Provide additional training and best practices.
Credit unions are encouraged to provide feedback via https://[email protected].
Looking Ahead:
- Beginning July 28, CEOs will receive MERIT reminders to complete the post-exam survey.
- After the federal hiring freeze is lifted, the Ombudsman’s office plans to:
- Transition into an independent entity.
- Gain additional resources and staffing.
- Engaging with state regulators:
- Recently met with NASCUS and plans to expand collaboration with SSAs.
- Will attend the upcoming NASCUS Conference.
Central Liquidity Facility
Finally, the Board was briefed on the Central Liquidity Facility (CLF). As of June 30, 2025, the CLF has grown in membership to 447, which equates to 10% of the total credit unions.
- Total Assets: $1.030 billion
- Borrowing Authority: $22.7 billion
- Investment Income: $20.1 million
- Dividends: $16.4 million
- Net Income after Dividends: $2.2 million
- Operating Expenses: $0.95 million
- Retained Earnings: $46.1 million
The CLF’s plans for the future include monitoring liquidity conditions, conducting stakeholder outreach and communication, bolstering and growing CLF membership, providing federal contingent liquidity when needed, and exercising agreements with correspondents to ensure that administrative and operational processes are functional, thereby meeting potential future loan demands.
Finally, the Board encouraged the credit union industry to provide comments by August 15, 2025, on the Agency’s 2022 – 2026 Strategic Plan. Feedback can be submitted by emailing [email protected].