NCUA examiners will begin using a new questionnaire, among other changes, when the agency’s updated rules on interest rate risk management takes effect Sept. 30, the agency said in a letter this week.
The IRR rule covers all federally insured credit unions of $50 million or more and credit unions of $10 million to $50 million where “the sum of your first mortgage loans held and investments with maturities exceeding five years is equal to or greater than 100% of your net worth at quarter end,” the NCUA letter said.
The new rule covers only 45% of the nation’s credit unions but they hold 96% of credit union assets.
“Boards and management of affected credit unions must be vigilant and well-prepared before interest rates rise. Exposed credit unions without appropriate interest rate risk policies pose unacceptable and preventable risks to the National Credit Union Share Insurance Fund,” the agency letter said.
The letter is intended to answer questions that have arisen since the rule was finalized in January, the NCUA said. It also includes guidance for evaluating interest rate risk and a new questionnaire that examiners will be using.
The letter added, “However, our standard for interest rate risk policies is not one-size-fits-all. We realize that exposed credit unions have different risk profiles. So while the rule provides guidelines for policies, we are also providing flexibility for credit union managers and board members to develop their own policy – and we are giving affected credit unions several months to comply,” the agency said.
The letter, frequently asked questions, and guidance for the new IRR rule are available online.
Last month, the NCUA posted a YouTube video about the new rule.