CUNA expressed concerns on Monday over the cost of complyingwith the NCUA's proposed stress test rule, which would affect thefour largest credit unions in the nation.

“The agency [NCUA] will be conducting the stress testing andit's going to cost, according to them, $4 million just in the firstyear to conduct this stress testing – that's $1 million for eachone of them,” said Mary Dunn, CUNA senior vice president and deputygeneral counsel on a conference call Monday.

Dunn added, “We think it's really unclear – where did thisnumber come from? Why is it going to cost so much and why is itnecessary that the agency actually be the entity that conducts thestress testing?”

Hear: Audio clip of NCUA Chair Debbie Matz on stresstesting

Dunn said the NCUA continues to indicate that they have talkedto the four credit unions with more than $10 billion that are goingto be subjected to stress testing from NCUA.

“We also are going to be talking to those credit unions becausethere are a number of concerns about the stress testing proposal,”said Dunn.

She said NCUA Board Member Michael Fryzel made a “really goodpoint” at the October board meeting when he mentioned that thesecredit unions already conduct their own stress testing. When Fryzelasked what would happen if the test results conflict, Dunn said hedid not receive a “great answer.” Scott Hunt, director of theOffice of National Examinations and Supervision, said the NCUA'stest would supersede a credit union's test.

Paul Gentile, executive vice president of strategiccommunications and engagement, downplayed the importance of thesuperiority of the NCUA's stress tests, saying CUNA does notsupport the need for the new regulation at all.

“Additionally, the proposed rule on stress testing is put forthby the agency even though the NCUA is aware that the largest creditunions already conduct stress testing on their own,” he said.

“All four credit unions that would be affected by this rulealready do stress testing. We don't think the cost of stresstesting is justified and that NCUA can monitor credit unions' ownstress testing and evaluate them without having to implement a newregulation that is expected to cost $4 million in year one,”Gentile told Credit Union Times on Monday.

NAFCU shares similar concerns about the rule.

“While NAFCU understands NCUA's policy goals, two of the NCUA'sactions today are symptomatic of the agency's regulatory plungeinto areas where new regulations are simply unnecessary. Theliquidity rule, for example, was issued despite the fact thatcredit unions already have access to multiple sources ofliquidity,” NAFCU CEO Dan Berger said last week.

In an interview with Credit Union Times on Thursday,NCUA Chairman Debbie Matz stressed the importance of the proposedstress test rule.

“Our share insurance fund is $11.7 billion, so there are fourcredit unions with assets over $10 billion. Three of those four arelarger than our share insurance fund,” Matz said after the NCUA board meeting on Thursday.

“So it's a very significant risk to the fund and there's noreason why a credit union of $10 billion or more should not be heldto the same standard in terms of forward-looking testing that otherfinancial institutions are held to,” Matz said.

The credit unions that would be required to comply are the $54billion Navy Federal Credit Union in Vienna, Va., the $27 billionState Employees' Credit Union of Raleigh, N.C., the $16 billionPentagon Federal Credit Union in Alexandria, Va., and the $12billion BECU in Tukwila, Wash.

The NCUA's stress tests would be based on Sept. 30 financialdata.