Separate interest-rate risk rule a concern for CUNA

November 4, 2014

WASHINGTON (11/5/14)--While the Credit Union National Association is pleased that the National Credit Union Administration has signaled it will pull the interest-rate risk (IRR) component from its risk-based capital proposal, CUNA is concerned that the agency is considering an entirely new IRR rule.

While CUNA has previously expressed concerns with the way IRR was addressed in the risk-based capital proposal, President/CEO Jim Nussle said he is wary of a separate rule.

"We've got some grave concerns about the agency adding yet another regulation in this area," Nussle said. "As we said in our comment letter on risk-based capital, in addressing the IRR component, the agency already has rules on the books in this area, and an additional one just might not be necessary at this time."

The separate proposal was first reported last week, after the American Association of Credit Union Leagues' Regulatory Advocacy and Compliance Advisory Committee, along with CUNA staff, met with NCUA officials.

Paul Gentile, president/CEO of the Massachusetts, Rhode Island and New Hampshire Credit Union Leagues and chair of CUNA's Examination and Supervision Subcommittee, has been particularly outspoken about the lack of need for new regulation in this area. Gentile also attended last week's meeting with NCUA Chair Debbie Matz.

During that meeting, league leaders urged the agency to move carefully going forward with such a proposal. Multiple league presidents told the NCUA that any IRR proposal should not be written in light of the current rate environment, that regulations should be drafted that account for any rate environment.

In its letter filed with the NCUA May 28, CUNA called for interest-rate risk, as well as concentration risk, to be addressed in the regulatory, examination and supervision process.