Monday, April 4, 2011

Three Risk Areas for New Regulations

In a letter to credit unions, NCUA identified three risk areas that will be of particular emphasis for the agency in the coming year -- credit risk, interest rate risk, and concentration risk.

The letter states that NCUA will closely monitor and supervise these risks. But it also provides guidance to where NCUA will or may make changes in its existing regulations.

In March, NCUA issued a proposed rule on the management and mitigation of interest rate risk.

Moreover, the letter indicates that the agency may issue new rules to address credit risk and concentration risk.

NCUA may issue a proposal that will enhance its "business lending regulation to better ensure safe and sound underwriting and credit risk management at credit unions." Also, NCUA wrote that it is working on "a proposal to adjust the Risk Based Net Worth calculation in the Prompt Corrective Action regulation that would place more emphasis on concentration risk factors."

Read the letter.
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