Justice and Law Enforcement:

Allegations of Improper Management Practices at NCUA

GGD/OSI-97-44R: Published: Apr 8, 1997. Publicly Released: Apr 8, 1997.

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Pursuant to a congressional request, GAO reviewed allegations of improper management practices at the National Credit Union Administration (NCUA), focusing on the: (1) internal operations of the NCUA Board and the role of the Chairman; (2) role of NCUA staff in establishing official NCUA policy; and (3) legality and propriety of NCUA actions in sponsoring and promoting a 1996 conference, "Serving the Underserved".

GAO noted that: (1) first, GAO did not find any evidence that the Chairman of the NCUA Board acted illegally in his conduct of Board operations as alleged by former Board member Robert H. Swan; (2) however, because of the apparent distrust and animosity that existed among Board members and in some cases extended to certain senior staff, the influence and effectiveness of the other Board members were almost certainly diminished; (3) second, for the most part, actions taken by NCUA staff that GAO was able to document appear to have been primarily the implementation of policies determined by the Board, although certain actions arguably could be characterized as the making of new policy; (4) policymaking and policy implementation form a continuum, and legitimate disagreements can occur about the boundary between them; (5) members of the Board, in carrying out their oversight responsibilities, should have the right and opportunity to discuss and determine whether any particular action by staff may have crossed that boundary; (6) largely because of poor communication between the Chairman and the Board members, together with the Chairman's control of the agenda, it appears that the Board, as a whole, did not always have that opportunity; (7) third, while the NCUA has the legal right to sponsor, plan, and promote educational conferences for credit unions, such as the 1996 conference, the NCUA failed to provide timely direction to regional managers and examiners about their proper role in such an undertaking; (8) because of this failure, some examiners contacted credit unions to solicit financial support for the conference; and (9) although these actions appear not to have been illegal, GAO believes they were inappropriate and that such conduct could jeopardize the professional relationship that should exist between a financial institution and its examiner.

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