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Matz to AACUL: NCUA to help CUs manage higher risk

WASHINGTON (11/16/09)--Speaking before the American Association of Credit Union Leagues (AACUL) annual meeting in Naples, Fla., National Credit Union Administration (NCUA) Chairman Debbie Matz said that agency is "strengthening supervision to help credit unions manage areas of heightened risk."

One way this is being accomplished, Matz said, is increased reviews of call reports. Examiners are reviewing these reports for potential red flags, including concentrations of fixed-rate mortgages, and increased delinquencies in indirect lending portfolios, member business lending and loan participations, according to an NCUA release.

Examiners will also focus on fixed-rate mortgages, indirect lending, loan participations, and member business lending, Matz added.

NCUA examiners will be taking public administrative actions to ensure compliance, and examiners may follow up with public letters of understanding and agreement or cease and desist orders if a credit union has not followed NCUA recommendations, Matz said.

These administrative actions are not meant to discourage lending, Matz said, but are meant to "ensure that credit unions lend in a prudent, safe and sound manner."

Matz also previewed the corporate credit union proposal during the meeting. According to Matz, the new corporate rule will prevent the over-concentration of assets in any one type of investment, will modify capital standards to make them more consistent with Basel 1, and will establish new limits on cash flow mismatches to ensure that any asset/liability gap does not pose an excessive risk. The corporate rule, which will also prohibit so-called "golden parachutes" for high-ranking executives and recommend that corporate credit unions provide annual disclosures of the total compensation packages of all senior staff members, will be released for a 90-day comment period.

The NCUA has planned a pair of town hall meetings and an online webinar to solicit feedback on the proposal. (See related stories: CUNA's Hampel: Economic freefall has ended, 'REAL Solutions' program getting results, with state league help, League leaders give political pointers at AACUL meeting. And in CU System: Wisconsin league president elected AACUL chairman.)

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