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Matz: FSOC Recommendations have Direct Bearing on CUs
Monday, April 29, 2013 10:20 AM

The Financial Stability Oversight Council has released its 2013 Annual Report, and according to National Credit Union Administration Board Chairman Debbie Matz, three of their recommendations have direct bearing on credit unions.

The first is risks arising from a prolonged period of low interest rates, including duration extension and the possibility of credit risk-taking. Over the last several years, many credit unions have increased exposure to fixed-rate real estate and longer-term investments. The Council recommends that regulatory agencies continue their scrutiny of how potential changes in interest rates could adversely affect risk profiles, and this is a priority for NCUA.

Second, the report emphasizes that capital and liquidity buffers ‘form the most fundamental protection for the broader financial system.’ This is equally true in the credit union sector. We continue to evaluate capital and liquidity standards to make sure they are appropriate for a growing and evolving credit union industry.

Finally, operational risks, including cyber-security risks, are an emerging and rapidly changing threat. Credit unions are not immune to this threat, and this will be an area of continued emphasis and guidance.

 “As the supervisor and insurer of the credit union system, NCUA takes these recommendations and the analysis of emerging risks very seriously. A number of the risks identified and recommendations are consistent with our regulatory and supervisory priorities, and the report reinforces and reaffirms the critical nature of these priorities,” says Matz. “Every recommendation in this report is meaningful to the credit union industry; because financial stability and a healthy, growing economy are critical to the success of the industry.”