ALEXANDRIA, Va. – The NCUA Board approved the final stress testrule at the agency's monthly board meeting on Thursday, which isestimated to cost no more than $5 million.

However, the vote was split among the three-person board, withBoard Chairman Debbie Matz and Board Member Rick Metsger voting forthe measure, and Board Member Michael Fryzel voting against it.

The rule requires federally insured credit unions with assets of$10 billion or more to develop and maintain capital plans andsubmit to annual stress testing by the NCUA.

When the rule was first proposed, the NCUA board said it mightmake the results of the stress tests public. However, according tothe final rule the stress test results will not be made public forthe first several years.

The final rule also said the NCUA board must consider whetherpublicizing stress test results could harm credit unionmembers.

“As some stakeholders cautioned, stress test results could betaken out of context or misreported in public media,” said thefinal text of the rule. “This could lead members to faultyconclusions about their credit union's current health, and cause arun on deposits – one of the worst-case scenarios that stresstesting is intended to avoid.”

The rule also said the disclosure of stress test results will beconsidered when the rule is subjected to the NCUA's ongoingthree-year rule rotation.

“The board reserves the right to take a separate action onwhether or not to publicly disclose the stress test results,” thefinal rule said.

The NCUA also said a competitive bidding process will determinethe actual costs of the final rule. Staff estimates the finalcost for the first year would not exceed $5 million. Expenseswould be charged to the share insurance fund. Any stress testingexpenses higher than $5 million are subject to the approval of theNCUA Board.

The credit unions affected by the rule include the $54 billionNavy Federal Credit Union in Vienna, Va., the $27 billion StateEmployees' Credit Union of Raleigh, N.C., the $16 billion PentagonFederal Credit Union in Alexandria, Va., and the $12 billion BECUin Tukwila, Wash.

Matz said the final rule is worth the $5 million maximum cost ifit prevents one of the covered credit unions from failing.

The board disagreed with commenters who suggested a 4% capitalratio. The final rule requires these credit unions to maintain astress test capital ratio of at least 5%.

“We are well positioned to protect the entire industry which isour mandate,” Matz said.

Fryzel said during the meeting the final rule is in need ofimprovements, particularly regarding the cost.

He also cautioned NCUA staffers are not ready to beginimplementation of the rule.

In a release, NAFCU called the rule duplicative andunjustifiably costly.

“We have been arguing for less, not more, regulatory burden inour conversations with the NCUA, other regulators and Congress,”said NAFCU Director of Regulatory Affairs Mike Coleman. “This finalrule significantly ramps up current burdens and increases costs forall insured credit unions.”

CUNA President/CEO Bill Cheney said in a statement his tradealso did not support the final rule.

“While we acknowledge the utility of stress tests, we see noneed for a rule,” he said in a statement. “Further, the agency hasnot sufficiently substantiated a need for the use of third partiesto conduct stress testing of covered credit unions, rather thanreviewing the assumptions and results of credit unions' own stresstests.”

While Cheney said he appreciated the NCUA adoptingCUNA-suggested changes, like keeping stress test resultsconfidential, he criticized the rule's $5 million price tag for thefirst year.

The NCUA Board also approved a request from the $224 million CMEFederal Credit Union in Columbus, Ohio to expand its communitycharter.

In addition, a proposed rule to amend the associational commonbond requirements in the chartering and field of membership manualwas green lighted by the NCUA Board.

Agency staff said the rule would provide regulatory relief forcredit unions.

“These amendments expand the totality of the circumstances test,which is used to determine if a group satisfies the associationalcommon bond requirements to qualify to join a federal creditunion's field of membership,” said the board action memorandum.“The expansion of this test will help to ensure federal creditunion compliance with field of membership requirements. Theproposed rule will also grant automatic qualification to certaingroups that the NCUA has repeatedly approved in the past.”