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Derivatives Proposal Tops NCUA May Agenda
ALEXANDRIA, Va. (5/10/13)--A long-awaited National Credit Union Administration derivatives proposal will headline the three items on the agenda when the agency holds its May open board meeting at 10 a.m. ET on May 16.

NCUA Chairman Debbie Matz in February hinted that the agency is considering allowing well-run credit unions with the necessary expertise to use simple derivatives to hedge against interest rate risk (IRR). She said managing interest rate risk is a key concern for the agency.

Credit unions that demonstrate a relevant, material IRR exposure, have demonstrated the ability to manage derivatives, and have the net worth and financial health needed to manage derivatives could be allowed to invest in interest rate swaps and interest rate caps, the NCUA indicated last year.

The Credit Union National Association has encouraged the NCUA to permit state and federal credit unions to manage IRR through investments in simple derivatives. CUNA has also told the agency it supports allowing well-managed credit unions to invest in derivatives through third-parties, and granting independent derivative investment authority for certain credit unions with adequate derivatives experience.

The agency currently allows only a select number of federal credit unions to engage in derivatives through an investment pilot program.

Other items on the open board meeting agenda are:

  • A board briefing on a supplemental interagency proposed rule that covers appraisals for higher-priced mortgage loans; and
  • A final rule making technical adjustments to credit union regulations.
The agency is also proposing technical amendments to multiple parts of its rules and regulations. The Credit Union National Association will review these amendments to ascertain their substance.

Consideration of supervisory activities and an appeal under Section 701.14 and Part 747, Subpart J of NCUA regulations are on the closed agenda. The closed board meeting is scheduled to begin after the open meeting has ended.

For the full NCUA agenda, use the resource link.
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NCUA Agenda
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