ALEXANDRIA, Va.-Credit unions are urging NCUA to delay enactment of its new rule scrapping ratings by Wall Street agencies as a requirement for investments until the agency replaces the traditional ratings benchmark with definitive guidance.
"NCUA has noted that [it] will follow up with additional supervisory guidance," Bonnie Humphrey-Anderson, chief financial officer for Oregon's OSU FCU, said in a comment letter on the proposal. "It seems that this guidance should be available to credit unions at the same time as the final rule is implemented."
NCUA proposal is required under provisions of last year's Wall Street reform bill because lawmakers determined that poor or faulty ratings on many securities induced CUs, banks and other investors to buy what turned out to be bad securities. The proposal would replace Wall Street agency ratings with either narrative standards or a CU's own internal standard. NCUA is working with the Securities and Exchange Commission and other financial regulators to provide guidance for investing.
But CUs are expressing worry at the absence of guidance before a final rule is approved.
"Without uniform supervisory guidance," wrote Erin Mendez, chief operating officer for California's SchoolsFirst FCU, "confusion and conflicts over judgment will lead to counterproductive and costly processes potentially increasing risk and more burdensome exams."
