Capital Planning and Stress Testing Proposed Rule
NCUA issued a notice of proposed rulemaking (NPRM) that requires federally-insured credit unions (FICU) with assets of $10 billion or more to submit capital plans annually to the agency. NCUA will also perform stress testing of these FICUs. The agency states that stress testing “would provide useful information for both NCUA and the FICUs.”
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) requires stress testing for large banks and bank holding companies, but not for credit unions. NCUA believes, however, that stress testing will provide an extra measure of safety to the National Credit Union Share Insurance Fund (NCUSIF) by ensuring the largest credit unions are able to withstand certain financial scenarios. The agency has indicated that in its opinion larger credit unions represent and outsized risk to the NCUSIF because of their size and thus require additional monitoring by the agency.
The proposed rule does not make stress test results public or require credit unions to perform their own stress tests. NCUA states that the stress testing program could cost the agency as much as $4 million. We are requesting supporting analysis detailing the cost estimates.
Please submit comments to CUNA by December 15, 2013. NCUA is accepting comments until December 31, 2013. If commenting directly to NCUA, comments should be addressed to Gerard Poliquin, Secretary of the Board, National Credit Union Administration, 1775 Duke Street, Alexandria, VA 22314-3428.
For more information about this proposed rule, contact CUNA Deputy General Counsel Mary Dunn or Assistant General Counsel Lance Noggle
Click here for the proposed rule in the Federal Register.