Posted by Tessema Tefferi
As most (if not all) of you know, NCUA has issued its long-awaited proposed rule to overhaul Part 704 of NCUA’s rules and regulations (corporate rule). The proposed rule addresses a wide array of issues, most of which are related to corporate credit union capital requirements, investment authority, limits on risk, and corporate governance. About a month ago, NAFCU issued a Regulatory Alert summarizing the proposal and seeking comments from NAFCU members. Your comments are critical to the development of our comment letter, as is the case with each that we submit to the NCUA or other federal agencies.
So, we are reaching out to you again for your comments. While you are welcome to write to us on any matter addressed in the proposed rule, as well as what you believe the NCUA should have addressed, I thought I would point out a few aspects of the proposal that your credit union can focus on.
- What do you think about the proposed rule to institute a risk-based capital regime and a corresponding PCA system for corporates?
- Should the NCUA bolster the limits it proposed on corporate credit union investment authority by more fully addressing credit risk? If so, should there be enhanced requirements relative to securities analysis in addition to, or instead of, the requirements that securities be top-rated by credit rating agencies?
- Do you find the proposed requirements related to ALM clear enough and appropriate to measuring ALM, including use of net economic value?
- What do you think of the proposed retention of most of the current expanded authorities?
We would love to hear your thoughts on these issues and others. You can e-mail me at [email protected] or call me directly at (703) 842-2268.
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