The Office of Inspector General recommended adding an S category tothe NCUA'sCAMEL rating system to more effectively monitor interestrate risk, according to a Nov. 13 report.

The OIG conducted an audit into the NCUA's IRR policy todetermine if its policy and procedures reduce IRR. The OIG alsostudied what actions the agency has taken or planned to take inorder to identify and address credit unions with IRR concerns.

In the report, the OIG concluded that the NCUA's CAMEL ratingsystem may not be effectively capturing IRR when assigning thecomposite rating to a credit union. The report stated that in theNCUA's assessment of sensitivity to market risk under the L in itsCAMEL rating may “understate or obscure instances of high IRRexposure in a credit union.”

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