The National Association of State Credit Union Supervisors is warning that if results of proposed mandatory annual stress tests for institutions bigger than $10 billion in assets are made public, they could endanger the National Credit Union Share Insurance Fund by mistakenly promoting runs.
NASCUS noted that because an otherwise healthy credit union can only raise capital through retained earnings to meet potential shortages the institution might have to endure a stigma of a "failed" test for some time which could erroneously lead to runs by members unfamiliar with the distinction between "normal" capital levels and stress test levels.
NCUA is proposing the tests as part of its efforts to conform credit union evaluations with enhanced Dodd-Frank Act bank supervision, but has not said whether the results would be released to the public.
The FDIC started the tests for banks with over $10 billion in assets in 2013, but won't begin disclosures until the third testing cycle in 2015.
NASCUS's concern came in a comment letter to NCUA's Capital Planning and Stress Testing proposals.
The state regulators also urged NCUA to raise the threshold for obligating credit unions to maintain and submit annual capital plans from $10 billion in assets to $50 billion to be in tandem with the Federal Reserve's size mandate for bank holding companies.
Dec. 31 was the final official day for comment for the proposals issued in October. NCUA spokesman Ben Hardaway said more comments should be posted online early next week.
