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Washington Archive

Washington

Flexible accounting stance may come from NCUA

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WASHINGTON (3/30/09)—If an accountant is willing to be flexible about when a credit union books the cost of their 1% premium being assessed to replenish the National Credit Union Share Insurance Fund (NCUSIF), the National Credit Union Administration (NCUA) said it will be okay with that. A senior NCUA staff member told the Credit Union National Association that the agency will not necessarily challenge a decision of a credit union’s CPA or auditor to take into consideration a recent legislative proposal by the NCUA when making an accounting decision about when to book the replenishment. The NCUA declared a premium would be collected from natural person credit unions later this year to cover the cost to the NCUSIF of the agency’s actions to stabilize corporate credit unions liquidity. The agency announced Thursday that it has drafted legislation to allow credit unions to spread the cost of the replenishment over as many as seven years. However, it will take an act of Congress to authorize the longer time frame. Addressing the uncertain situation faced by credit unions, the NCUA staff member made the following points:
* NCUA does not set accounting rules; * Based on what AICPA put out recently, credit unions can book their costs in 2008 or 2009; * For credit unions that choose to book in this year, the NCUA already has advised that the 1% deposit replenishment must be booked by March 31; * The premium will be assessed later in the year, likely September, and should be booked then; and * The legislation being sought by the NCUA is not a certainly and therefore should not affect the March 31 statements.
Most important, NCUA said that if a credit union's CPA or auditor approves taking the legislation into consideration in deciding whether the 1% replenishment must be recognized by March 31st, NCUA will not necessarily challenge it.

White House conference call adds detail to reg reform

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WASHINGTON (3/30/09)—The White House and U.S. Treasury Department Friday gave more detail on its financial regulatory reform platform during a by-invitation conference call. Those invited included the Credit Union National Association (CUNA) and other national financial services groups. Jeffrey Bloch, senior assistant general counsel of the Credit Union National Association, said the call focused on four components of the Obama administration’s restructuring efforts:
* Addressing systemic risk; * Protecting consumers/investors; * Eliminating gaps in the regulatory structure by reassigning resources and accountability; and * Fostering international cooperation since U.S. actions will affect global markets.
The bulk of the call, Bloch said, was dedicated to discussing systemic risk. The administration described the following six areas to be explored to address systemic risk:
* Single independent regulator for all systemic important entities. Named by Congress, the regulator would issue substantive rules and responsibilities. The regulator would focus on risk, not the legal form of the entity and payments/settlement systems would be strengthened, such as for derivatives and other activities not currently closely supervised. * Higher capital and risk management standards would be set for systemic important entities. Prompt Corrective Action requirements would be required at the holding company level. * Hedge funds over a certain size would have to register and provide info to the Securities and Exchange Commission (SEC), and uniform requirements would be imposed. Data would be collected to assess the risk of these funds to determine how systemically significant they are. * An addition of protection requirements for derivatives, such as credit default swaps. Dealers and others would be evaluated to determine their systemic importance, with a goal of increasing the amount of information reported and its transparency. There would also be more eligibility and suitability requirements with regard to derivatives. * New SEC requirements for money market mutual funds would be implemented. * Regulators would have stronger resolution authority for complex, non-bank entities.