CUA Releases Derivatives Proposal, Board Meeting Summary Available on the League Site

Posted by Marissa Anema Friday, May 17, 2013 10:55:00 AM


ALEXANDRIA, Va. – The key item on the NCUA Board agenda Thursday was the proposal on derivatives, which both Chairman Matz and Board Member Fryzel voted to issue for a 60-day comment period.

The proposed rule would allow eligible credit unions to engage in interest rate swaps and to purchase interest rate caps. The proposal would apply to federal credit unions and federally insured state-chartered credit unions that are permitted under state law to engage in derivatives and that meet NCUA’s criteria.

Both Board members questioned whether assessing fees to participants is appropriate; nonetheless, the proposal is seeking comments on whether there should be Level I application fees starting at $25,000 and Level II application fees ranging from $75,000 to $ 125,000 depending on the complexity of the application. The Board is also seeking comments on whether annual NCUA costs for staff, contractors, and/or examination hours should be borne entirely by credit unions that use derivatives. NCUA staff projects that 75 to 150 credit unions will apply for derivatives authority in the first two years. 

NCUA staff estimate that the program will require 6-12 new examiners and $6 million to $ 11 million to initiate. CUNA is scrutinizing the agency’s estimates.

Also at the meeting, the Board was briefed on a forthcoming interagency proposal that would amend the Truth in Lending, Regulation Z, interagency Appraisals Rule adopted in January of this year.

The Board also adopted a final rule that makes a number of technical amendments to NCUA’s regulations based on issues identified by staff and through NCUA’s rolling, three-year regulatory review process. The rule will take effect when it is published in the Federal Register.

CUNA’s full summary of the meeting is available on the League Web site here


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