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New insight post provides an in-depth recap of NAFCU, NCUA meeting on interest rate risk
A new insight post on the NAFCU CFO Network and Compliance, Risk, & BSA Network provides an in-depth recap of a meeting held earlier this month between NAFCU staff, NAFCU member credit unions, representatives from third party service providers, and the NCUA’s Office of Examination and Insurance (E&I) and Division of Capital and Credit Markets. During the meeting, the group discussed ongoing concerns with the net economic value (NEV) supervisory test and the agency’s recent updates to its interest rate risk (IRR) supervisory framework.
The updates, announced in a Letter to Credit Unions issued by the agency in September, are intended to improve the “NCUA’s supervision of IRR in credit unions given current market conditions.” Of note, a previous insight post on the NAFCU CFO Network and Compliance, Risk, & BSA Network summarizes the recent actions and guidance on IRR and the NEV test.
The insight post also provides details on the group’s discussion about concerns related to the Federal Home Loan Bank (FHLB) system and the ability to use FHLB advances to bridge short-term funding gaps or to lock in longer-term funding at stable rates. NAFCU has urged the Federal Housing Finance Agency (FHFA) to waive the prohibition in its tangible capital rule to allow credit unions to continue accessing liquidity through advances from FHLBs.
Credit unions are encouraged to reach out directly to NAFCU Regulatory Affairs Counsel James Akin, jakin@nafcu.org, with any questions.
NAFCU’s CFO Network and Compliance, Risk & BSA Network are complimentary, member-only online communities exclusively for credit union compliance professionals. Learn more about the NAFCU Networks.