ALEXANDRIA, Va. — Should the NCUA Board approve a finalderivatives rule, the interest rate risk management tool could costthe agency as much as $16 million over three years.

The proposed rule, which would permit qualified credit unions toinvest in derivative swaps and caps, was approved by the board Thursday at its monthly meeting.

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If finalized, the costswould include one-time charge of $300,000 to train current staff,which would come mid-year 2013. Additional costs this year wouldalso include a $1 million charge for subscriptions to provide forthe acquisition, support and maintenance of analytical toolsrequired for appropriate asset liability managementsupervision.

Once the framework for the rule is in place, the NCUAanticipated it would need between $6.25 and $10.75 million tohandle an estimated 75 to 150 applications for the expandedauthority.

The agency estimated 2014's one-time expenses would include$4,000 for pay and benefits for additional staff training programsand anywhere from $3.8 million to $6.5 million to hire contractemployees to create the program, process applications and assistwith supervision.

The actual number would depend upon how many credit unions applyfor the expanded authority.

NCUA Director of Examination and Insurance Larry Fazio told theboard he recommends hiring contractors over permanent staff becausehe expects a one-time influx of applications in 2014.

Estimated 2014 expenses for the program also include between$1.8 million and $3.6 million for six to 12 new full timeequivalent NCUA employees needed to supervise the authority oncegranted.

Five to 10 employees would be located in regional offices, withone or two located in the NCUA's Alexandria, Va. headquarters. Arecurring charge of $250,000 would also take place in 2014 forsubscriptions.

The NCUA anticipates the dust will settle in 2015, and costs forthe program would be limited to ongoing pay and benefits forpermanent staff and subscriptions, ranging from a little more than$2 million to $3.85 million.

NCUA Board Chairman Debbie Matz and Board Member Michael Fryzelencouraged credit unions and other industry stakeholders to providefeedback during the rule's 60-day comment period regarding whetherthe agency should charge credit unions applying for the authorityfees to cover the added expenses.