NCUA Board Approves Final Liquidity and Call Report Rules, Proposes Annual Stress Tests

The National Credit Union Administration (NCUA) Board approved three items at its Oct. 24 meeting:

  • A final rule requiring all federally insured credit unions to plan for liquidity events. Credit unions with assets exceeding $250 million need to have access to NCUA’s Central Liquidity Facility, the Federal Reserve’s Discount Window, or both.
  • A final rule requiring all federally insured credit unions to electronically file Call Report information with NCUA. The rule will reduce operating costs and result in more accurate and timely credit union data.
  • A proposed rule to protect the National Credit Union Share Insurance Fund by requiring annual stress tests at federally insured credit unions with assets exceeding $10 billion.

The final liquidity and contingency funding rule is effective on March 31, 2014. The new rule establishes a three-tiered framework for federally insured credit unions.

Credit Union Asset Size

Liquidity Rule Requirement

Under $50 million

Federally insured credit unions in this group must maintain a basic written liquidity policy. Approved by a credit union’s board, the policy must provide a framework for managing liquidity and a list of contingent liquidity sources that can be employed in emergency situations.

$50 million or more

In addition to a written liquidity policy, federally insured credit unions in this group must have a contingency funding plan that clearly sets out strategies for meeting emergency liquidity needs.

$250 million or more

In addition to a written liquidity policy and contingency funding plan, federally insured credit unions in this group must establish access to at least one contingent federal liquidity source: the NCUA’s Central Liquidity Facility, the Federal Reserve’s Discount Window, or both.

The second final rule approved by the NCUA Board requires the electronic filing of Call Reports and will be effective in January 2014, when fourth-quarter Call Reports are due. Credit unions must begin electronically filing Call Report and Profile information starting with the Dec. 31, 2013 Call Report cycle using the NCUA’s online system.

Finally, the NCUA Board approved a proposed rule that would require stress testing for credit unions with more than $10 billion in assets. Stress tests are forward-looking measures designed to determine whether an institution is holding an adequate capital cushion to survive adverse scenarios and to allow credit unions to make adjustments before a crisis hits.

The Dodd-Frank Act requires certain financial firms with more than $10 billion in assets to conduct annual stress tests. NCUA’s Office of National Examinations and Supervision would oversee the stress testing, which would be based on scenarios issued each year by the Federal Reserve. Currently, four credit unions—Navy Federal Credit Union, State Employees’ Credit Union of North Carolina, Pentagon Federal Credit Union and BECU—would be subject to the proposed rule.

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance, Federal, NCUA.