The second involves net worth requirements. And the third involves prompt corrective action. Let's first look at the way that the NCUA makes major safety and soundness policies and then lets credit unions know about those policies. We found that the NCUA had a greater tendency than the other federal financial regulatory agencies to put fundamental safety and soundness policies not in regulations but in guidelines, manuals, policy statements, or standard by-laws. For example, if you wanted to find the limit on loans to one borrower, you had to look in the standard by-laws.
Informality can be good.
But it's also important to know what the real rules really are. If that's what's going on, the rule should be written down in a place you can find it. We recommend that the NCUA make important safety and soundness rules readily accessible to credit unions. We also recommend that if the NCUA means for a rule to have the force of law, it should give people a chance to comment before it adopts the rule. This approach would benefit credit unions in at least three ways.