ALEXANDRIA, Va. (3/14/13)--The National Credit Union Administration has sent a reminder to credit unions that its new liquidity and contingency planning regulation will become effective March 31 (Letter to Credit Unions 14-CU-05).
The NCUA letter includes a supervisory letter and examination questionnaire for examiners to use when reviewing liquidity risk management at credit unions. These resources will give credit unions further insight into how the NCUA will examine for compliance, the agency said.
Under the final rule:
Credit unions with less than $50 million in assets would need to maintain a basic written emergency liquidity policy, but would not be required to take further action;
Credit unions with assets of $50 million or more would be required to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations; and
Credit unions with assets of $250 million or more would be required to have access to a backup federal liquidity source for emergency situations.
The final rule does not include the Federal Home Loan Banks (FHLB) as an acceptable source of emergency liquidity, although eligible credit unions required to meet the federal source provisions would be free to borrow from a FHLB for nonemergency purposes. Without the FHLB, credit unions have two options to ensure a federal liquidity source for emergency situations: Becoming a member of the NCUA's Central Liquidity Facility (CLF) by subscribing to CLF stock or access to the Federal Reserve's discount window.
The Credit Union National Association strongly supports the use of the home loan banks for liquidity.
CUNA has developed an eGuide
section on the emergency liquidity rule, and the issue was also covered in the January 2014 edition of Credit Union Magazine
and March 10 issue of News Now
For the NCUA letter and CUNA resources, use the resource links.