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NCUA CU risk concentration regs out next year--Matz
WASHINGTON (12/10/10)--The National Credit Union Administration (NCUA) is developing new regulations on natural person credit union risk concentrations, and those regulations will be released during the first quarter of 2011, NCUA Chairman Debbie Matz said during a Thursday Senate hearing. Matz added that the agency is currently drafting revisions to some due diligence standards, and may need to enhance its own Office of Capital Markets to deal with credit ratings issues. However, any action related to its Office of Capital Markets is not pending, Matz said.
Click to view larger image NCUA Chairman Debbie Matz, right, speaks with Sen. Tim Johnson (D-S.D.) ahead of Thursday's hearing on the state of the credit union industry. Matz covered the corporate credit union crisis, the NCUA's response to that crisis, and legislative priorities for credit unions during her testimony. (Photo provided by NCUA)
Matz on Thursday spoke before the Senate Banking Committee during a hearing on the status of the credit union industry. Matz was the sole witness during the hearing. A recent NCUA Office of the Inspector General report that concluded that more aggressive NCUA supervisory actions could have helped the NCUA avoid several credit union failures and prevented the National Credit Union Share Insurance Fund (NCUSIF) from taking on substantial losses was also discussed during the hearing. Matz told Sen. Richard Shelby (R-Ala.) that the NCUA has responded to the report, which was released late last month, by altering its communication strategy with potentially troubled credit unions. Rather than issuing repeated low level warnings to these credit unions, the agency will take more serious action if a given credit union has not responded to an NCUA warning within 90 to 120 days, Matz said. In prepared testimony submitted before the hearing, the NCUA requested that Congress amend the Federal Credit Union Act by changing the net worth definition to allow certain NCUA-established loans and accounts to count as net worth. The FCU Act could also be changed to clarify that the NCUSIF equity ratio is based on NCUSIF-only, unconsolidated financial statements, the NCUA added. The NCUA also suggested that the NCUSIF itself could also be streamlined by giving the agency the option of making premium assessments on federally backed credit unions in advance of anticipated expenditures, a move that the NCUA said could avoid the need to borrow from the U.S. Treasury. The NCUA also detailed its anticipated requests for the upcoming 112th Congress. One priority, according to the NCUA’s testimony, will be extending the statute of limitations for actions that the NCUA makes as conservator or liquidating agent of a credit union. The agency will also pursue the authority to perform its own examinations of third-party vendors that provide services to NCUSIF-backed credit unions, and noted in the release that the current vendor arrangement, which limits the NCUA’s authority, “presents risks such as threats to credit risk, security of systems, availability and integrity of systems, and confidentiality of information.” For the full NCUA release, use the resource link.
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