Archive

Go to:

October 2017
SMTWTFS
1234567
891011121314
15161718192021
22232425262728
293031
< Sep Nov >
Leaguer Email Subscription

You are not currently subscribed. Click Subscribe below to receive the Leaguer email.

NCUA Considers Separate Interest-Rate Risk Proposal
Monday, November 3, 2014 6:30 AM

Responding to comments from credit unions, credit union leagues and the Credit Union National Association that interest-rate risk (IRR) should not be addressed in risk weightings in the risk-based capital (RBC) proposal, several officials at the National Credit Union Administration are seriously considering a separate IRR proposal. This approach would remove IRR from certain risk weights in the upcoming RBC proposal the agency is developing.

The IRR rule would supplement current supervisory IRR efforts and is intended to target credit unions with the heaviest exposure to IRR that might, under economic duress, become undercapitalized.

The agency received a record 2,056 comment letters on the RBC proposal, and many, including CUNA, disagreed with its approach to IRR. The proposal would have accounted for IRR through investment risk weights.

In their May 28 letter, CUNA pointed out that by focusing exclusively on concentrations of longer-term assets, the proposal fails to account for how the maturity structure of liabilities can mitigate interest-rate risk and does not follow the general approach of Basel with respect to interest-rate risk.

The agency has preliminarily consulted with asset and liability management practitioners, registered investment advisers credit union derivatives practitioners, and others prior to beginning the design of such a rule.

According to the NCUA, its staff is now in the process of producing a proposed RBC rule for eventual board review and potential action, which may be issued in in the coming months.

The American Association of Credit Union Leagues' (AACUL) Regulatory Advocacy and Compliance Advisory Committee met with NCUA officials Thursday to discuss credit union issues, including the RBC proposal. They also discussed examination concerns, NCUA's budget, NCUA's mission, and concerns regarding the Consumer Financial Protection Bureau.