No need for stress test rule; $5 million is just too much

(April 24, 2014) — 

Statement by CUNA President and CEO Bill Cheney

On adoption by NCUA Board of ‘stress test’ rule for large credit unions

CUNA did not support this proposal. While we acknowledge the utility of stress tests, we see no need for a rule. Further, the agency has not sufficiently substantiated a need for the use of third parties to conduct stress testing of covered credit unions, rather than reviewing the assumptions and results of credit unions’ own stress tests.

We appreciate that the agency has adopted some changes that we suggested – such as not disclosing results publicly – and has agreed to allow credit unions to apply to have results of their own tests used for these purposes. However: The cost for the program — which must be borne by all federally insured credit unions — is now up to $5 million for the first year, which we believe is just too much.

It is crucial that NCUA apply the rule as judiciously as possible, particularly since the vote on final approval was split, 2-1 (and board members signaled their willingness to consider future changes). We encourage the agency to do all it can to work with the covered credit unions and CUNA in the development of guidance. The agency should also work to contain costs wherever possible.

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