LUAs - What You Need to Know

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LUAs What You Need to Know

Key Points:
- LUAs are formal agreements between NCUA and credit unions to address severe problems
- Usually issued to troubled credit unions, though occasionally for compliance reasons
- Formal LUAs are typically published by NCUA
- LUAs describe major issues and required corrective actions with timelines
- Language in published LUAs can be very strict and one-sided
- Credit unions should seek outside advice when faced with a published LUA
- All board members are bound by an LUA, even those who vote against it
- LUAs should focus on root causes, not every minor issue
- LUAs for established credit unions generally don't have termination dates
- In the current economic climate, NCUA may be issuing more LUAs

Advice for Credit Unions:
- Understand all requirements and timelines in an LUA before signing
- Negotiate terms with NCUA if possible before finalizing
- Request reasonable time to review draft LUA with board
- Consider consulting attorneys or credit union advisors 
- Be aware of reputational risks from published LUAs
- Recognize that all board members are bound by a signed LUA

Guest Experts:
- Steve Farrar: Former NCUA examiner and central office staff
- Todd Miller: Former NCUA examiner and director of special actions

Host: Mark Treichel, Credit Union Exam Solutions

This episode provides an in-depth look at Letters of Understanding and Agreement (LUAs) from former NCUA insiders, offering valuable insights for credit union leaders dealing with these formal actions.