NCUA Issues Rule on Interest Rate Risk Policy and Program, Takes Other Actions

The NCUA Board of Directors held its monthly meeting Thursday, January 26 and released one final rule, one proposed rule, and one advanced notice of proposed rulemaking. As the Board decided last month to move to quarterly Share Insurance Fund reports, there was a discussion of the health of the fund.

Final Rule on Interest Rate Risk Policy and Program

The rule revises NCUA’s rules and regulations Part 741.3(b) to add a written interest rate risk policy and an interest rate risk management program as a requirement for insurance for all federally insured credit unions (FICUs). The rule also provides guidance to FICUs on how to establish an interest rate risk policy and effective program. The rule excludes FICUs below $10 million in assets and FICUs $10-50 million in assets with a percentage of first mortgages and investments greater than 5 years that is less than 100% of net worth. The rule is effective six months after publication in the Federal Register (September 2012).

Part 741 was further amended by adding an Appendix B that serves as NCUA’s guidance for an effective Interest Rate Risk Policy. Chairwoman Matz stated that the new guidance will not be used as an examination checklist.

Proposed Rule on Troubled Debt Restructured Loans

NCUA released a proposal to require federally insured credit unions (FICUs) to maintain written policies that address the management of loan workout arrangements and nonaccrual policies for loans, consistent with industry practice or Federal Financial Institutions Examination Council requirements. The proposed rulemaking includes an interpretive ruling and policy statement (IRPS) incorporated as an appendix to the rule that will assist FICUs in complying with the rule. The IRPS also addresses regulatory reporting of troubled debt restructured loans on FICU Call Reports.

NCUA has put the proposed rule out for a 30-day comment period, and MDDCCUA will be thoroughly analyzing the proposal in the coming days and drafting a comment letter on behalf of Maryland & DC credit unions. Should you have any comments or questions regarding this proposal or MDDCCUA’s comment letter, please contact Ricardo Pineres at .

Advanced Notice of Proposed Rulemaking on Derivatives

The NCUA Board approved an Advanced Notice of Proposed Rulemaking (ANPR) requesting additional public comments to identify the conditions for federal credit unions (FCUs) to engage in certain derivatives transactions for the purpose of offsetting interest rate risk. The ANPR, which further elaborates a prior advance notice of proposed rulemaking approved by the Board on June 16, 2011, seeks additional information to assist in drafting a proposed rule for FCUs to independently engage in derivatives transactions.

If you have any questions regarding NCUA actions, contact Ricardo Pineres, MDDCCUA Vice President of Advocacy - Legislative Affairs, 443- 325 – 0775, or .