New Bank Reform Law Wont Slow NCUAs Corporate Proposal
ALEXANDRIA, Va. – NCUA is not expected to delay a final vote on its corporate credit union regulation to implement provisions of the newly passed Wall Street reform bill, including the measures requiring certain credit ratings for corporate investments, and is still expected to vote the final rule next month.
Instead, the agency is expected to implement the credit rating and other provisions within the one-year period allowed under the new law, rather than delay the long-sought corporate rule even more, a top agency official told Credit Union Journal.
The NCUA Board is expected to vote the corporate rule at the same time as it releases details of a plan to dispose of as much as $50 billion of toxic assets held by the corporates, the NCUA official said, emphasizing though that a final decision on the timing if up to the NCUA Board.
The bank reform law enacted last month calls for reducing the influence of the three big rating agencies – Moody's Investors Service, Standard & Poor's and Fitch Ratings, which were widely discredited for giving high ratings to risky mortgage securities. But banking regulators are searching for alternatives to the credit agencies for determining the quality of investments held by banks.
NCUA’s corporate proposal lays out various requirements for corporate investments that include reliance on ratings provided by the rating agencies.
The NCUA source said rather than wait any longer to pass a corporate rule it plans to pass the new rule in September and use the 12-month implementation period to amend the rule afterward.