CUNA maintains credit unions should remain exempt from stress testing requirements, as Congress intended, in a comment letter on NCUA’s proposed rule on capital planning and supervisory stress testing. NCUA’s proposal would remove some of the capital planning and stress testing requirements currently applicable to certain covered credit unions and and provide a multi-tier graduated schedule for credit union compliance.
It is also designed to make NCUA’s capital planning and stress testing requirements more efficient by, among other things, authorizing credit unions to conduct their own stress tests in accordance with the NCUA’s requirements and allowing those credit unions to incorporate the stress test results into their capital plan submissions.
“Although the proposed rule is still more prescriptive than necessary, it does give credit unions greater flexibility in meeting stress testing requirements by allowing credit unions to perform their own stress tests as opposed to the agency-conducted stress tests currently required,” the letter reads. “CUNA members, already subject to the current stress testing requirements that have undergone an annual stress test cycle, report that compliance is resource-intensive and unduly costly. This is especially evident in preparing the initial capital plan and stress test.
“These costs are also ongoing as credit unions must have additional staff to develop, conduct, and analyze the stress test assumptions and data validity,” the letter adds.
CUNA also noted that any stress testing supervisory requirements should continue to provide exemptions for small institutions measured on a scale other than fixed asset thresholds.
CUNA also added that for larger credit unions already subject to supervisory stress testing, regulatory relief would be significantly diminished.