Lending

Risk, Regulation Top Economics Conference Agenda

Interest-rate risk a key concern for NCUA.

August 28, 2014
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Risk

Interest-rate and liquidity risk, cyber security, and member business lending topped the agenda during CUNA’s recent Economics and Investment Conference in Boston.

Jared Ihrig, CUNA’s associate general counsel for regulatory affairs, offered a glimpse into regulations coming from NCUA, the Consumer Financial Protection Bureau (CFPB), the Federal Financial Institutions Examination Council (FFIEC), and more.

Key issues, CUNA’s News Now reports, included:

• Interest-rate risk. NCUA called interest-rate risk "the most significant risk the credit union industry faces right now" in a January letter to credit unions. Regulations require at least an annual review or policy to be in place.

• Cyber security. FFIEC announced a pilot program which will be conducted as part of regular examinations by state and federal regulators. The program, which will feature approximately 250 credit unions, will assess preparedness to identify, manage, and control cyber risks.

• Member business lending (MBL). NCUA is expected to propose revisions to its member business lending regulations later this year. Despite the promise of bills that would increase the current MBL cap of 12.25% of assets, no congressional action is expected this year on CUNA-supported legislation.

• Liquidity risks. New liquidity policies applicable to all federally insured credit unions became effective March 31.

Credit unions with less than $50 million in assets must maintain a basic written liquidity policy; those with more than $50 million must also have a contingency funding plan featuring strategies for dealing with shortfalls; and credit unions with more than $250 million in assets must establish access to at least one contingent federal liquidity source.

• Fair lending. CFPB has introduced new Home Mortgage Disclosure Act rules, which require more reporting than the stringent standards required by Dodd-Frank. CUNA believed the increased requirements will cause hardships for some credit unions.

Comments on this proposal are due Oct. 22.

• Truth in Lending Act (TILA)/Real Estate Settlement Procedures Act (RESPA). New TILA/RESPA integrated disclosure rules will go into effect Aug. 15, 2015, and will consolidate existing mortgage disclosures required under TILA/RESPA into two integrated forms.

CFPB will hold several webinars throughout the implementation process.

Ihrig said credit unions should address three key questions

  1. What are the laws and regulations your credit unions is subject to across all jurisdictions in which you operate?
  2. What is the level of confidence that the credit union is complying with all pertinent laws and regulations?
  3. Can your credit union prove compliance to critical parties, such as board members, regulators, and members?

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