Compliance

A Proactive Regulatory Approach

NCUA is setting guardrails along the regulatory road, Hyland says.

March 20, 2012
KEYWORDS interest-rate , ncua , risk
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NCUA Board member Gigi Hyland took the stage at Tuesday’s General Session and recalled two promises she made six years ago during her first GAC appearance:

1. Always put credit union safety and soundness first; and

2. Actively listen to credit union concerns by getting outside the Beltway and talking to individuals one-on-one and in groups.

“I have kept both of those promises,” said Hyland. “Through the most severe financial crisis since the Great Depression, I made policy decisions by asking tough questions and looking at the issues from a 360-degree perspective.”

Recent final and proposed regulations by the NCUA Board address emerging risks for the credit union system, she pointed out. The rules focus on interest-rate risk, CUSOs, loan participations, and emergency liquidity. They come in response to criticisms raised by NCUA’s Inspector General, the Government Accountability Office, and credit unions that NCUA did not act in time to prevent sizeable losses to the National Credit Union Share Insurance Fund and the Stabilization Fund.

But the Board is now trying to get ahead of issues and to proactively set guardrails along the regulatory road, she said. For example, NCUA’s final interest-rate risk rule requires most federally insured credit unions to develop and adopt a written policy on interest-rate risk management.  

“Growing real estate portfolios and deposit bases create opportunities for growth, but must be managed wisely, especially in today’s unusual interest-rate environment,” added Hyland. “Taking a proactive regulatory approach to this impending risk for credit unions isn’t meant to place an undue burden on credit unions. Rather, it’s meant to alert you to the issue so you can put the necessary safeguards in place.”

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