NCUA Letter to CUs Cites 2013 Exam Goals
"As a regulator and insurer, NCUA's goal is a strong, safe credit union system. To that end, NCUA continues to incorporate lessons learned and feedback from credit unions into our
examination approach," Matz said to open her letter to credit union directors and CEOs.
Areas in which NCUA will strive to enhance the clarity of examiners include member business lending (MBL), credit rating, and troubled debt restructurings (TDRs).
Matz said credit unions can expect a supervisory letter to add clarity to the process and expectations for MBL rule waiver requests. The letter will address, in particular, waivers for personal guarantees and blanket waivers versus individual loan waivers for aspects of the MBL rule. The guidance will also focus on appropriate underwriting and credit monitoring systems for MBLs, Matz said.
The agency also will issue follow-on guidance for examiners and credit unions on complying with the final rule, required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, replacing the use of credit ratings with alternative standards to assess the creditworthiness of securities and money-market instruments.
Also, based on the final NCUA rule on TDRs, the NCUA will provide additional guidance for examiners on examining for compliance with the rule's requirements and the credit union's accounting practices
related to TDRs.
Matz indicated that examiners will combine an awareness that federally insured credit unions continue to exhibit positive trends in most key while also continuing to evolve and face various economic and operational challenges.
The letter said examiners will evaluate a credit union's capacity to manage risk in the following areas:
- Operational risk involving technology and internal controls; and,
- Balance sheet management, including interest rate and liquidity risk, concentration risk--where a credit union might offer "too much of a good thing," and risk that can be associated with offering less established or complex products.