WASHINGTON (5/31/13)--The Credit Union National Association is asking credit unions to comment on all aspects of a National Credit Union Administration proposal to allow well-run federal credit unions to use simple derivatives to hedge against interest rate risks (IRR). The request for comments is part of CUNA's overall review of the proposal.
Approved for comment at its May open board meeting, the NCUA plan would allow only well-managed credit unions with $250 million or more in assets, and which have appropriate expertise, to apply for an agency derivatives investment program. Swaps and caps will be the only approved investments, the NCUA said. In addition to application costs, the proposal says fees will be charged to cover costs related to application processing and supervision of the program.
The NCUA estimated that 75 to 150 credit unions would apply for derivatives authority within the first two years of the program. The agency said it would need to add new resources to handle application processing and supervision if the program is approved.
While it considers it a positive that the NCUA is considering permitting eligible credit unions to use simple derivatives to hedge against IRR, CUNA has said that credit unions have given initial feedback that voice some concerns with the proposal. The concerns include overly restrictive limits, the use of third-parties to help meet requirements and the proposed fee structure.
Use the resource link below to read CUNA's comprehensive Comment Call. NCUA is accepting public comments until July 2; CUNA requests comment by June 22.