Credit Union Exam Solutions Presents With Flying Colors

Mark Treichel sits down with Steve Farrar and Todd Miller to break down Letters of Understanding and Agreement—NCUA's formal enforcement tool that requires board-level commitment. With over 100 combined years of NCUA experience, including Steve's authorship of NCUA's enforcement manual, this episode delivers insider perspective on what LUAs mean for credit unions, how boards should approach them, and critical mistakes to avoid.Key Topics CoveredWhat triggers an LUA: Understanding when NCUA escalates from informal actions to formal enforcement, and why most credit unions receiving LUAs are classified as troubled.Published vs. unpublished: The distinction that creates reputation risk, how industry publications find published LUAs, and which state regulators require publication.Board accountability: Why voting no or abstaining doesn't protect individual directors, and what fiduciary responsibility means when your credit union signs an LUA.Negotiation before signing: How to approach discussions with your examiner or problem case officer, ensuring timeframes are realistic and commitments are achievable.Root causes vs. comprehensive lists: Why LUAs should focus on fundamental problems, and what to do when you're facing a lengthy document with dozens of items.Satisfying an LUA: The two-part test NCUA applies—completing actions AND achieving intended results—and why there's no built-in expiration date.Notable Quotes"The LUAs only addressed mainly what we would refer to as the root causes of the problem." — Steve Farrar"The language in published LUAs is very draconian and very one-sided. It's intended to be serious." — Todd Miller"If you abstain or vote no, and the board agrees to sign, you're still subject to that agreement. It was a board decision." — Mark TreichelAbout the GuestsSteve Farrar spent 30+ years at NCUA, including 15 years as a problem case officer and 15 years in the central office where he authored NCUA's enforcement manual and worked on corporate resolution and risk-based capital regulations.Todd Miller served nearly 35 years at NCUA as an examiner, problem case officer, regional capital market specialist, and Director of Special Actions supervising problem case officers and capital market specialists.ResourcesCredit Union Exam Solutions: marktreichel.comRelated Episode: Documents of Resolution and Examiner Findings

A candid solo reflection prompted by a recent sports tragedy. Personal memories of suicides linked to embezzlement and supervisory work are recounted. Stories include a suspicious

A step-by-step look at NCUA's formal appeal process, from timelines to levels of review. Discussion of when to resolve issues with examiners and when escalation is necessary. Coverage of what qualifies as an appealable supervisory determination and how CAMEL ratings factor in. Tips on building a durable administrative record and realistic outcomes like partial wins and oral hearings.

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/The NCUA has issued a proposed rule implementing the GENIUS Act, establishing a federal licensing framework for payment stablecoin issuers.For the first time, credit union subsidiaries could apply to become Permitted Payment Stablecoin Issuers (PPSIs) — but only under strict supervisory standards.In this episode, Mark breaks down:Why credit unions cannot issue stablecoins directlyHow the subsidiary licensing model worksThe 10% “Parent Company” threshold and joint application structureThe 1% CUSO investment cap and its impact on participationThe 120-day statutory decision clockHow this compares to FDIC, OCC, and Federal Reserve proposalsWhy “rewards vs. interest” could become the next regulatory battlegroundHow the proposed CLARITY Act fits into the broader digital asset frameworkThis proposal represents one of the most significant expansions of NCUA supervisory authority in decades. While stablecoin issuance is optional, the regulatory guardrails are now taking shape.Comments on the proposed rule are due 60 days after Federal Register publication.If your credit union is considering digital asset innovation, payment modernization, or cooperative technology ventures, this episode outlines the strategic considerations.Key TopicsGENIUS Act stablecoin frameworkSubsidiary-only issuance requirementPPSI licensing processCapital and liquidity expectationsCUSO structure implicationsJoint ownership modelsRegulatory cost recovery debateCLARITY Act market structure considerationsWhy This MattersStablecoins are not insured shares. They are not backed by the full faith and credit of the United States. They cannot blur the line between payments and deposits.Understanding these distinctions will be critical as the industry evaluates next steps.If you found this episode helpful, share it with a colleague and subscribe to With Flying Colors for ongoing insights into NCUA policy, supervision trends, and regulatory strategy.

In this special archive episode of With Flying Colors, Mark Treichel is joined by Steve Farr and Todd Miller — both former NCUA leaders — to revisit a foundational topic that continues to shape credit union supervision today: risk appetite, risk culture, and concentration risk.While regulators often emphasize capital levels, history shows that capital alone cannot offset poor risk governance. This conversation explores why concentration risk continues to challenge institutions — even those that appear well capitalized.Drawing on decades of regulatory experience, the team walks through the core components of a modern risk management framework and discusses how boards should think about oversight in today’s environment.What We Cover🔹 Risk Culture Starts at the TopWhy tone from the board and CEO matters more than policiesHow troubled institutions often trace back to cultural breakdownsThe board’s role in defining acceptable risk🔹 Risk Appetite: Limit or Goal?What a risk appetite statement actually meansWhy limits must be measurable and monitoredThe difference between qualitative intent and quantitative control🔹 Concentration Risk in the Real WorldThe taxi medallion example and what it taught the industryWhy 15%+ capital ratios were not enoughHow concentration risk interacts with capital and stress scenarios🔹 The Three Lines of DefenseFrontline business unitsRisk management oversight (including the Chief Risk Officer role)Internal audit and supervisory committee functions🔹 Examiner Expectations TodayStress testing and concentration limitsSupporting board-approved limits with dataWhat happens when limits are breachedWhy documentation and reporting matterKey TakeawaysCapital can absorb losses — but it cannot fix poor diversification.Risk appetite should reflect capital strength, strategic goals, and institutional complexity.Concentration limits are not aspirational targets — they are guardrails.Effective risk management requires culture, measurement, and accountability.Why This Still MattersRegulatory guidance continues to evolve, but the core principles of risk governance remain unchanged. Whether you lead a $300 million credit union or a multi-billion-dollar institution, understanding how risk culture, appetite, and oversight interact is essential.This archive episode remains highly relevant as examiners increasingly scrutinize concentration risk and enterprise risk management practices.

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/In this episode of With Flying Colors, Mark Treichel is joined by former NCUA leaders Geoff Bacino, Alonzo Swann, and John McKechnie for a timely and candid discussion about Chairman Kyle Hauptman’s appointment to the Public Company Accounting Oversight Board (PCAOB) — and what it signals for the future of the NCUA.While the announcement appears straightforward, the panel explains why it creates a ripple effect across the agency, including questions about leadership continuity, pending lawsuits, board vacancies, staff reductions, and the broader stability of the regulator at a critical time for credit unions.This conversation goes beyond speculation and into how the agency actually functions when leadership is in flux — from delegation of authority to examiner operations to internal morale.You’ll hear insider perspective on:Why Hauptman’s “intent to remain” language mattersHow the Slaughter/Harper lawsuits could determine the shape of the future boardWhat a one-member board means in practiceWhy notation votes and lack of public discussion are becoming a concernThe real impact of a 27% staff reduction at NCUAHow agency expertise gaps are affecting morale and operationsThe upcoming interest rate ceiling decision and why it may be politically sensitiveWhy the agency may be “running itself” more than people realizeWhat happens if the Supreme Court changes how independent boards operatePredictions on who may replace Hauptman and what that means for credit unionsThe panel also discusses how political dynamics, Senate control, and White House strategy could shape the next NCUA board in ways credit unions haven’t seen before.Despite the uncertainty, one theme is clear: the blocking and tackling of supervision continues, but major structural decisions are happening quietly beneath the surface.This episode is essential listening for anyone trying to understand where NCUA is headed in 2026.👥 GuestsGeoff Bacino – Former NCUA Board MemberAlonzo Swann – Former NCUA Regional DirectorJohn McKechnie – Washington, DC credit union advocate and consultant

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/Chairman Hauptman’s Statement on Appointment to PCAOBALEXANDRIA, VA (January 30, 2026) – National Credit Union Administration Chairman Kyle S. Hauptman issued the following statement after being named as a member of the Public Company Accounting Oversight Board (PCAOB).“I am grateful to President Donald J. Trump and Chairman Paul S. Atkins for their faith in me and for the appointment to the PCAOB,” said Chairman Hauptman. “I intend to remain in my role as NCUA Chairman until my successor is appointed by President Trump and confirmed by the U.S. Senate.”

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/In this episode of With Flying Colors, Mark Treichel is joined by former NCUA senior leaders Todd Miller and Steve Farrar for a deep dive into NCUA’s 2026 Supervisory Priorities Letter — and what it means in the real world for credit unions heading into the next exam cycle. Deep Dive on NCUA Priority Lett…With significant staffing reductions at the agency and a shift toward more “risk-based” supervision, the group discusses whether exam programs will truly become more tailored — or whether credit unions should expect more conservative ratings, more findings, and less dialogue.The conversation also explores what’s emphasized, what’s missing, and how operational realities inside NCUA may shape supervision more than policy statements.Key Topics Discussed🏛️ NCUA Operations and StaffingHow a 27% reduction in staff could affect exam consistency and depthWhy less-experienced exam teams may lead to more conservative CAMEL ratingsConcerns about “CYA supervision” and addressing symptoms rather than root causes📊 Balance Sheet Management and Credit RiskWhy industry data does not support claims of worsening asset qualityContinued focus on credit concentrations and underwriting practicesWhat outsourcing of lending and collections may trigger in exams💧 Liquidity and Interest Rate RiskWhy interest rate risk is often overstated as a failure driverOngoing scrutiny of liquidity forecasting modelsGrowing competition for deposits from fintechs and non-banks💵 Earnings, Capital, and Rising ExpensesWhy operating expenses are growing faster at credit unions than banksTechnology investments, staffing costs, and post-COVID catch-up spendingCapital planning expectations despite fewer references in the priority letter⚙️ Operational Risk, Payments, and TechnologyIncreasing complexity of payment platforms and third-party integrationsWhy internal audit functions matter more than everRisks created by rapid fintech adoption🕵️ Fraud Prevention and Member ProtectionAI-driven fraud and voice spoofing risksWhy protecting members is now as critical as protecting institutionsReputation risk from scams and social media amplification📋 Compliance and What’s MissingNotable reduction in consumer compliance emphasisBSA remains a regulatory constantWhat the absence of certain topics may signal about regulatory priorities🎙️ Practical Exam StrategyWhy recording exit conferences can protect credit unionsHow appeals and documentation can matter more in constrained environmentsWhy This Episode MattersNCUA’s priority letters set expectations — but exam outcomes are often shaped by staffing, experience, and regional risk perceptions. As the agency continues to restructure, understanding how policy meets practice has never been more important.This episode offers insider perspective on:How exam approaches may shift in 2026Where credit unions should expect closer scrutinyWhy communication and documentation will matter more than ever

In this emergency update of With Flying Colors, Mark breaks down a newly proposed NCUA rule that could meaningfully reduce barriers to serving on a federal credit union board.The proposal would allow federal credit unions to reimburse or directly pay reasonable dependent care costs for volunteer officials when those costs are incurred while attending board meetings or performing official duties — including, potentially, training and conferences.This is a narrow but important change that reflects rising childcare and eldercare costs, declining volunteerism, and the increasing demands placed on credit union boards.Mark also shares brief updates on the Central Liquidity Facility (CLF), NCUA’s regulatory simplification efforts, and what’s coming next on the podcast following recent discussions at a credit union conference cruise.🔍 What the Proposed Rule Would DoApplies to federal credit unions only (state charters follow state law)Allows reimbursement or direct payment of:ChildcareAdult dependent care (elder care, disabled dependents)Covers costs incurred while:Attending board meetingsPerforming official duties (which may include training and conferences)Applies only to volunteer officials, not paid executives🚫 What the Rule Does Not DoDoes not allow reimbursement for:Lost wagesPaid leaveIndirect costs of volunteeringDoes not change compensation rules under the Federal Credit Union ActDoes not require credit unions to reimburse these costs — policies remain optional and discretionaryDoes not change IRS tax treatment — consult tax professionals for reporting requirements💡 Why This MattersChildcare costs have increased more than 200% since 1990Volunteer participation has declined significantly since pre-pandemic levelsFederal credit union boards:Must meet at least 12 times per yearCannot generally be compensatedThis proposal may help:Attract younger and working-age professionalsSupport caregivers and single parentsImprove diversity of experience and perspective on boards🧭 What NCUA Is Asking for Public Comment OnNCUA is inviting industry feedback on:Whether reimbursement should be limited to temporary or incremental costsWhether training and conference travel should clearly qualify as official dutiesDocumentation and internal control standardsBest practices from state-chartered credit unionsCredit unions and board members are encouraged to submit comments during the open comment period.🔜 What’s Coming Next on the PodcastA follow-up episode with Mark’s team discussing:NCUA’s 2025 Supervisory Priorities LetterWhat it really means for exams and operationsCoverage of NCUA’s upcoming webinar on supervisory priorities (February 19)Continued “emergency update” episodes when time-sensitive issues break

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/In this special preview episode of With Flying Colors, Mark Treichel tees up an upcoming live, on-stage discussion from the Florida Q’s Cruise with team members Steve Farr and Todd Miller.Just days before the cruise, NCUA released its 2026 Supervisory Priorities Letter, and as always, that letter gives us important clues about what examiners will be focused on in the year ahead — and just as importantly, what’s driving examiner behavior behind the scenes.This episode serves as a primer for the deeper, post-cruise discussion, where we’ll incorporate real-time feedback and questions from credit union leaders attending the cruise.🧭 Big Picture Theme: NCUA in ChaosBefore diving into technical priorities, Mark frames the conversation around what many credit unions are experiencing operationally:Leadership instability and fewer board actionsRetirements, buyouts, and staffing lossesRevolving and often less-experienced examinersExams prioritized over approvals and strategic requestsBottom line:Chaos upstream is driving impact downstream — and that reality shapes how exams feel, how findings are delivered, and how long approvals take.📌 What’s in the 2026 Supervisory Priorities Letter?Mark walks through the major categories NCUA highlighted and why they matter:🟦 Lending / Credit RiskDelinquencies and charge-offs at decade highsFocus on underwriting, concentrations, and workoutsContinued scrutiny of commercial real estate and indirect lending🟦 Liquidity & Interest Rate RiskStress testing assumptions under closer reviewStructural liquidity constraints getting more attentionAlignment between balance sheet strategy and risk appetite🟦 Earnings & Capital AdequacySustainability of earnings under stress scenariosCapital planning tied directly to risk profilesMore forward-looking analysis expected in exams🟦 Payment Systems (Back as a Headline Topic)Real-time payments and complex integrationsVendor risk, data exposure, and cyber vulnerabilitiesGovernance and internal controls over payments ecosystems🟦 Fraud Prevention and DetectionInternal controls and separation of dutiesInsider abuse explicitly called outExam procedures being updated to reflect evolving fraud risks🟦 BSA / AML Compliance Risk ManagementShift away from broad consumer compliance narrativeStronger focus on risk-based AML programsPrograms must be tailored to actual institutional risk🔄 What’s Notably Different from Prior Years?Mark also highlights important shifts compared to earlier supervisory letters:Cybersecurity is no longer a standalone headline — now embedded in Operational Risk and PaymentsConsumer financial protection is not emphasized as a top categoryFraud and payment systems return after being absent for several yearsGovernance expectations are increasingly embedded in every risk areaThese changes align with what many credit unions are already experiencing in exams — more findings tied to process, oversight, and documentation, not just numbers.🎤 What’s Coming After the CruiseDuring the Florida Q’s Cruise, Mark, Steve, and Todd will be discussing:What credit unions are actually seeing in recent examsWhere examiner expectations are rising fastestHow governance findings are being framedWhat boards should be asking management right nowHow to manage regulatory uncertainty proactivelyAfter the cruise, a full follow-up episode will bring those insights back to the broader audience.🎯 Key TakeawayThe risks themselves haven’t changed dramatically — but NCUA’s capacity, processes, and delivery of supervision have.Credit unions that adapt their governance, documentation, and strategic planning to that reality will be better positioned to manage both exam outcomes and approval delays in 2026 and beyond.You can’t fix NCUA’s chaos — but you can manage how it impacts you.