The NCUA has released a letter to credit unions andquestion-and-answer sheet regarding the new interest rate risk management rule, which takes effect Sept.30, and posted it on the NCUA'swebsite.

The information includes the most commonly asked IRR questionsthe NCUA took away from four webinars on the topic, includingresponsibility for the creation, oversight and management of therequired IRR written policy and program, measurement and monitoringrequirements, internal controls, and what influence the IRR shouldhave on management decisions.

When the rule becomes effective, examiners will use an examination questionnaire the NCUA distributed in May. Creditunions should “consider the guidance this provides to examiners asyou evaluate the credit union's policies and program,” the NCUAsaid in the new letter.

However, the NCUA said examiners will not use guidance includedin Appendix B of the rule “in a checklist type manner”, but rather,will “look at the size and complexity of your credit union and workto determine whether the program is effective.” The guidancefocuses on the core components necessary for an effective riskmitigation program and describes best practices credit unions canconsider as they write their IRR policy and develop IRR managementprograms.

The question-and-answer sheet also addresses the rule'sSupervisory Interest Rate Risk Ratio, which will be used todetermine which credit unions will be subject to the rule. TheSIRRT is calculated by adding total first mortgages to totalinvestments with terms of five years or longer, and then dividingthe result by total net worth.

Credit unions with fewer than $10 million in assets are exempt from the rule, asare those with between $10 and $50 million in assets that have anSIRRT ratio less than 100%.