WASHINGTON (9/1/09)—New joint federal regulatory guidance on funding and liquidity risk management makes sense at for banking organizations, but would only be redundant to existing rules for credit unions, the Credit Union National Association (CUNA) said in a comment letter submitted Monday. The CUNA letter addresses proposed interagency guidance issued the National Credit Union Administration (NCUA), Office of the Comptroller of the Currency, Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of Thrift Supervision. The proposed guidance is intended to clarify and summarize principles of sound liquidity risk management previously issued by the agencies. CUNA adamantly supported “robust, ongoing liquidity risk management at all credit unions” in its letter, but delineated a number of reasons why the NCUA should not go forward with the proposed guidance. For instance, CUNA noted, sound liquidity risk management policies and processes already are well covered in the agency’s Examiner’s Guide
, “Chapter 13- Part 3, ALM-Liquidity Risk.” All of the key components of the guidance are addressed sufficiently in the examination procedures, including adequate sources of liquidity, contingency planning in the event of liquidity problems, monitoring and reporting on liquidity," noted Mary Dunn, CUNA senior vice president and deputy general counsel, who signed the letter. CUNA also wrote:
* The NCUA has not provided a sufficient rationale for new requirements that would be imposed on federal credit unions; * The proposed guidance attempts to impose uniform liquidity risk management procedures on all financial institutions regardless of size or charter type, while CUNA believes that the proposed guidance is more appropriate for very large banks; * Regarding corporate credit unions, the NCUA already is reviewing the structure of the corporate system and, CUNA pointed out, “any additional requirements for corporate credit unions in this area should be addressed in the context of that review.”
The CUNA letter concluded that it is better for the agency not to go forward with the proposal, but added if NCUA feels it is necessary to address liquidity risk issues, it should develop a Letter to Credit Unions that focuses on specific problems and addresses steps credit unions can take to address them under the agency’s current liquidity risk management requirements. Use the resource link to read CUNA’s complete comments.