ARLINGTON, Va. — Both CUNA and NAFCU feel NCUA's proposed new rule on stress tests for CUs above $10 billion in assets is not needed.
The trade associations sent comment letters to NCUA, with CUNA stating it favors NCUA guidance instead of the proposed rule. NAFCU feels the new rule needs to be modified if it is adopted.
Carrie Hunt, SVP of government affairs and general counsel, states that NAFCU supports the notion of stress testing and advanced capital planning. But Hunt says the proposed rule, if adopted, would do little to enhance the security of the National Credit Union Share Insurance Fund and would add additional regulation to credit unions.
She states NAFCU opposes the proposed rule in its current form and recommends NCUA not adopt it. Should NCUA adopt the rule, NAFCU asks that the agency modify the rule or provide greater clarity on certain aspects.
Among a number of points made, NAFCU noted opposition to third-party stress testing, favoring allowing covered credit unions to continue to conduct their own stress testing.
"At regular intervals the NCUA could select independent consultants to review the assumptions and processes used by covered credit unions to verify their soundness and validity," stated Hunt.
NAFCU also disagrees with the proposed rule's use of net economic value as a key metric, and it also suggests NCUA should alter the two-year final maturity assumption for core deposits.
CUNA Deputy General Counsel Mary Dunn states regulations are not needed to ensure that credit unions will conduct robust stress tests and comprehensive capital planning, "since it is in their own best interests, and those of their members, to do so."
Instead of finalizing a new rule, CUNA contends NCUA should issue similar guidance and administer the guidance through the examination process.
The comment letter follows the October release of an NCUA proposal what would require federally insured credit unions with assets exceeding $10 billion to develop and maintain capital plans, and undergo annual stress tests.
