1
Background. The Department, acting through the Division of Financial
Institutions, Credit Union Section, may determine it is prudent to take an
enforcement action against a credit union. The enforcement action may either be
specified by the Act or not.
A Enforcement
actions not specified by the Act are DORs and Letters of Understanding and
Agreement (LUAs).Violations of the terms of a DOR or LUA may be enforced
through administrative actions specified by the Act.
i A DOR is set forth in the Examination
Report and outlines an identified problem and corrective action plan to resolve
the problem. A problem included in a DOR shall be significant enough that the
Department may escalate the matter to the next level of elevated enforcement
action for failure to correct the problem. Problems requiring attention that
may be addressed in a DOR include, without limitation, unsafe or unsound
practices that reasonably threaten the stability of the credit union.
ii An LUA is an enforcement action presented
to a credit union by the Department to initiate corrective action of identified
material deficiencies or weaknesses in the credit union's administration or
operations. The LUA shall be structured as an agreement between the Department
and the credit union, pursuant to which the credit union agrees to the terms
specified in the LUA.
B
Other enforcement actions are Cease and Desist Orders, Orders of Removal and
Civil Penalty Orders. These enforcement actions are specified by the Act and
may be unilaterally imposed on the credit union by the Department, provided
that a credit union may appeal such actions to the extent provided by the Act
and this Part. The Department may take enforcement actions for, among other
things, significant and material violations of laws or rules, unsafe and
unsound practices, breach of fiduciary duty, violations of orders and failure
to implement or comply with previous regulatory actions.
2 Progressive Steps of Review. In connection
with any request for reconsideration of any examination finding and/or
examination corrective action item, the following procedures shall apply:
A Examiner Level - Credit union management
officials shall be encouraged to directly resolve disagreements, complaints or
issues with the Examiners on-site during the regulatory examination, including
the Examiner in Charge (EIC), or directly with any Examiner who otherwise
identifies a deficiency or issue during any examination, visitation,
investigation or review of the credit union.
B Supervisory Level - In the event the credit
union and Examiner are unable to reach a mutually acceptable resolution of the
issue, the credit union may discuss the issue with the Assistant Supervisor or
Supervisor of the Credit Union Section.
C Director Level - If the credit union and
Supervisor or Assistant Supervisor are unable to resolve the issue, either
party may ask the Division Director to rule on the dispute. The Director may
agree to do so or decline to do so.
D Department Internal Review Committee -
Irrespective of whether the Director renders a decision on the issue, the
Director may elect to request that an internal panel of Department personnel
consider the issue and render a final regulatory recommendation to the credit
union. The internal review committee shall consist of the Director or his or
her designee, Supervisor, Assistant Supervisor, Problem Case Officer and an
Examiner not involved in the examination. In cases in which there is a vacancy
in a designated office, the committee comprised of the other designated
incumbents shall proceed to review the matter.
E Nothing in this subsection (d)(2) shall be
construed to impair or abrogate the right of a credit union to request a formal
hearing under Section
190.20 to review the
propriety of an administrative action or regulatory decision of the
Department.