NCUA derivatives proposal could be released 'soon,' Matz says
She noted 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 and the proposal would be issued "soon."
The agency will also address clarity in member business lending waivers, she said. An agency letter that addresses blanket waivers, guarantees and when a waiver is required for a structured or balloon loans is in the works. The NCUA will also release credit ratings and troubled debt restructuring guidance, Matz added.
The NCUA chairman launched her joint webinar with CFPB Director Richard Cordray by noting the challenges of "the smallest" credit unions, and noting agency tools available to those credit unions.
Matz, after reviewing trends in the general economy said that credit union health overall is "very encouraging" with a solid average capital level of 10%. She noted that delinquencies and chargeoffs continue to decline.
However, Matz added that some of the smallest credit unions, those with $10 million or less in assets, are struggling with a return-on-assets of zero, which in fact is an improvement over recent negative numbers. She said the pressures on these smallest credit unions are spurring a number of mergers.
"The NCUA is concerned about the health and survival of some small credit unions," Matz told the webinar audience. She added that the agency has come up with a number of plans and tools to support their operations, such as:
- Reducing the number of examinations hours to around 40;
- Providing more services through the agency's Office of Small Credit Union Inititiatives, such as consulting and helping with net worth restructuring plans; and
- Increasing the use and availability of web tutorials.
She also noted the recent significant change, advocated by the Credit Union National Association, that increased the threshold that defines a small credit union to $50 million in assets, up from $10 million.
CFPB Director Cordray is now addressing the webinar participants.