NASCUS Files Comments on NCUA’s Proposed Emergency Liquidity Access Rule

Jenny Champagne, VP, Regulatory Affairs and Government Relations
(703) 528-5974

Arlington, Va. – NASCUS has filed comments on NCUA’s Notice of Proposed Rulemaking for Part 741, Maintaining Access to Emergency Liquidity.  NASCUS emphasized the importance of liquidity planning to risk management and the safe and sound operation of credit unions, and noted that state regulators had participated in the development of the Federal Financial Institution Examination Council (FFIEC) liquidity guidance issued in March, 2010.

In its comments, NASCUS questioned the need for additional rulemaking in light of the thorough nature of the 2010 FFIEC liquidity guidance, but also provided specific constructive recommendations for the rule as proposed.   Among NASCUS’ recommendations was a suggestion that NCUA raise the asset categories to more realistically reflect the distinctions between small, mid-sized and larger credit unions.  NASCUS also expressed concerns with the reliability of the Central Liquidity Facility (CLF) as an emergency liquidity source given its structure and the time it takes to process requests.

With respect to the proposed rule’s exclusion of the Federal Home Loan Bank (FHLB) as an acceptable source of emergency liquidity under the rule NASCUS acknowledged NCUA’s concerns with the FHLB and noted that many state regulators share those concerns.  Citing those concerns as well as others regarding the CLF, NASCUS urged NCUA to carefully consider the specificity of the proposed rule for credit unions over $100 million in assets.

NASCUS did commend NCUA for responding to the confusion of the proposal’s applicability to the corporate system by clarifying that only natural person credit unions were covered.  NASCUS did recommend any final rule contain that clarification on the face of the rule.

Finally, in response to NCUA’s questions regarding applying BASEL III liquidity rules, NASCUS urged caution in light of the numerous issues regarding implementation of BASEL III for banking systems. NASCUS recommended NCUA work with state regulators, many of whom have expertise and experience with banking liquidity rules.

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