Trades criticize proposed stress tests
CUNA and NAFCU say the NCUA’s proposed stress test rule for credit unions over $10 billion in assets is costly and unnecessary considering the four largest credit unions in the nation already conduct their own tests.
The credit unions affected would be the $54 billion Navy Federal Credit Union in Vienna, Va., the $27 billion State Employees’ Credit Union of Raleigh, N.C., the $16 billion Pentagon Federal Credit Union in Alexandria, Va., and the $12 billion BECU in Tukwila, Wash. The NCUA’s stress tests would be based on Sept. 30 financial data.
Under the rule, these credit unions would be required to maintain a stress test capital ratio of at least 5% – higher than the 4% minimum leverage ratio required of banks since credit unions are unable to raise capital in the form of stockholder equity.
“Navy Federal is aware that the NCUA is drafting a proposal requiring credit unions exceeding $10B in assets to undergo annual stress tests. Navy Federal remains well-capitalized, and we will be monitoring the progress of this proposal as it goes forward,” a Navy Federal spokesperson told Credit Union Times on Thursday.
Jim Blaine, SECU president/CEO, recommended that the NCUA relinquish stress testing to the Fed.
“Required stress testing by SECU seems appropriate. Consistent with the best practices of other federal regulators, we believe publication of stress test results, at least for SECU, is the best course. We feel our member-owners deserve to know the results. Much like CPA audits,” Blaine said Thursday.
“NCUA should consider relinquishing the stress testing process of credit unions to the Federal Reserve, which is qualified to conduct the model results. This should save the remarkable $4 million ‘outsourcing’ estimate NCUA quoted. Let’s use the best – the Fed,” Blaine said.continue reading »