ALEXANDRIA, Va. (5/10/12)--The National Credit Union Administration (NCUA) explains its new interest rate risk regulations and advises credit unions on how to prepare for the new rules before they become effective this fall, in a new letter to credit unions (12-CU-05).
The letter is intended to assist credit unions in determining if they are subject to the new rule. The agency also included information on the questionnaire its examiners will use when they determine whether a covered credit union is complying with the IRR regulation.
The NCUA in January amended its federal share insurance regulations to include a requirement that federally insured credit unions have both a written IRR policy and an effective IRR management program. Credit unions with less than $10 million in assets are exempted from the new regulation. A credit union with between $10 million and $50 million in assets is only subject to the requirements if its first mortgage loans plus investments with maturities over five years equal or exceed 100% of its net worth.
NCUA staff have stressed that the IRR rules will not be "one-size-fits-all," and that the NCUA is providing flexibility for credit union managers and board members to develop their own policies.
Also, while the NCUA could withhold National Credit Union Share Insurance coverage of member accounts for credit unions that do not comply with the proposal, this would only happen in the most extreme of cases, the agency has said.
The Credit Union National Association will be monitoring the implementation of this rule very carefully. The rule will become effective on Sept. 30.
For the full letter to credit unions and the related questionnaire, use the resource link.