NCUA Issues Statement On Risk Weights
ALEXANDRIA, Va. – In the wake of the downgrade in U.S. debt by Standard & Poor’s, NCUA Chairman Debbie Matz has issued a statement in conjunction with other federal agencies seeking to “reassure their regulated institutions that risk weights remain unchanged.”
NCUA said it will continue to assign zero risk weights to credit union investments in Treasury securities, NCUA Guaranteed Notes (NGNs), and other securities issued or guaranteed by the U.S. government. The agency said its NGNs retain their current AAA rating, but have been placed on a “negative credit watch” by Standard & Poor’s and could be downgraded as a direct result of S&P’s downgrade of U.S. long-term sovereign debt.
“Any future downgrade of NGNs would have no impact on NCUA, since all NGNs have already been collateralized and sold. The proceeds from NGN sales provided liquidity to the corporate credit union system and reduced overall costs of the corporate stabilization program,” NCUA said.
The S&P downgrade covers four unsecured debt issues from two corporate credit unions that NCUA guaranteed under the Temporary Corporate Credit Union Liquidity Guarantee Program, but will not affect the costs of these corporate debt obligations to NCUA or credit unions, NCUA said.
Matz said NCUA is encouraging credit union to continue to meet members’ needs, including leveraging the $89 billion in cash credit unions have on hand.