Compliance Blog

Written by Steve Van Beek

Apologies for the later than usual posting today.  We had some unexpected technical issues.  

***

Yesterday, NCUA issued Letter to Credit Unions 12-CU-05 which provides an overview of their Interest Rate Risk regulation (12 CFR 741.3(b)(5)).  The requirements are effective September 30, 2012.

The Letter to Credit Unions addresses frequently asked questions since the rule was finalized in January.  The Letter also includes the Examination Questionnaire that has been provided to NCUA examiners.    

Below is the first FAQ:

"Is your credit union subject to the new requirements?

You are subject to the requirements of the final rule if:

• Your credit union’s assets exceed $50 million, as shown by your most recent Call Report filing; or
• Your credit union’s assets are equal to or greater than $10 million but do not exceed $50 million and the sum of your first mortgage loans held and investments with maturities exceeding five years is equal to or greater than 100% of your net worth at quarter end.

Otherwise, you are not subject to the rule requirements. We are mindful of the need to avoid unjustified regulatory burden. We recognize past efforts to develop sound IRR policy and believe many FICUs already meet the rule requirements.

To promote transparency and facilitate implementation for FICUs with higher IRR exposure, we included comprehensive guidance on developing an IRR policy and an effective IRR management program in an appendix to the rule. This guidance describes widely accepted sound practices in IRR management and prior supervisory guidance such as the FFIEC Advisory on Interest Rate Risk Management discussed in NCUA Letter to Credit Unions 10-CU-06 (May 2010)."

NAFCU Webcast.  We have a May 24th webcast which will feature NCUA speakers taking A Detailed Look at NCUA's Interest Rate Risk Rule.  You'll have an opportunity to ask your own questions during the webcast and hear directly from NCUA.  Save $100 by signing up by May 17th.  

***

Testimony on the Hill.  This morning Ed Templeton, CEO of SRP FCU and NAFCU Board Treasurer, testified during the House Financial Services Committee hearing "Rising Regulatory Compliance Costs and Their Impact on Small Financial Institutions."

You can read more about today's hearing in the NAFCU Today.  Mr. Templeton's full written testimony can be found here.  I have a feeling quite a few blog readers will find themselves nodding their heads in agreement while reading the testimony.