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NCUA Board Approves Performance Plan and Amends Proposed Rule on Stress Test Timing
Friday, January 16, 2015 6:30 AM

Along with the changes to the National Credit Union Administration's proposed revised risk-based capital rule, the agency also voted on a number of other issues.

NCUA's Annual Performance Plan Sets Direction for Agency
The NCUA Board by a unanimous vote approved its 2015–2016 Annual Performance Plan. The plan provides specific direction toward achieving the agency's mission and the strategic goals outlined in NCUA's 2014–2017 Strategic Plan.

"The Annual Performance Plan is the yardstick we use to measure how well we're doing in terms of reaching the goals we've set for ourselves," said NCUA Board Chairman Debbie Matz.

The Annual Performance Plan highlights goals, indicators, and targets to measure agency performance. NCUA designates these performance goals as priorities:

  • Implement a robust supervision framework for financial services reform regulations, including interest rate risk, liquidity and contingency funding plans, derivative authority, and capital planning and stress testing.
  • Issue industry guidance related to emerging cybersecurity risks and related threats.
  • Monitor issues or trends in consumer complaints to develop and promote financial literacy education and consumer protection programs.
  • Develop and communicate guidance to credit unions to explain regulatory changes and best practices.
  • Increase women and minority representation at all levels within the agency's workforce, particularly within NCUA's management ranks.
  • Strengthen security programs and communications.

Copies of the agency's Annual Performance Plan, as well as the Strategic Plan and public comments, can be found online here.

Proposed Rule Would Amend Stress Testing Timing
The Board by a unanimous vote approved a proposed rule (Part 702) to amend NCUA's capital planning and stress testing regulation to adjust the timing of certain events in the planning and testing cycles, generally by three months. This rule only affects the five federally insured credit unions with more than $10 billion in assets.

A critical date in the stress testing process is when NCUA releases various economic scenarios that are the basis of the testing. NCUA plans to base the scenarios on those developed by the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.

When NCUA's Board approved the final rule on capital planning and stress testing in April 2014, the three other regulators were scheduled to provide scenarios by Nov. 15 of each year. That date has since moved to Feb. 15, necessitating adjusting NCUA's schedule.

"It makes sense to modify our schedule to provide consistency among the largest regulated institutions," Matz said. "Even though the Dodd-Frank Act did not require stress testing of credit unions, the tests are equally important, as credit unions with more than $10 billion in assets are systemically important within the system. The benefit of preventing a potential failure of even one credit union with more than $10 billion in assets far out-weighs the maximum cost of stress testing."

Comments on the proposed rule, available online here, must be received within 60 days of publication in the Federal Register.