Friday, May 16, 2014

Is NCUA Ready to Supervise a Credit Union that Conducts Its Own Stress Test?

The transcript from the April 24 NCUA Board meeting makes it pretty clear that NCUA does not have the staffing or resources to supervise a credit union that conducts its own stress test.

NCUA Chariman Debbie Matz asked Scott Hunt, the head of the Office of National Examinations and Supervision, the following questions.

"The final rule provides that three years after enactment, a credit union can apply to conduct their own stress test. Does your office have the necessary staffing to supervise that if you agree that a $10 billion credit union at that point can do their own stress test? Are you staffed to handle that?"

You have to go to the fourth paragraph of his response to get the answer, which is no.

Scott Hunt said: "So basically it would pull together both personnel resources, information data gathering as well as an investment in software that we don't have today so the short answer on that is no, we are not ready to take this on."

Hunt notes the difference between the FDIC and NCUA with regard to data collection. He states: "The FDIC has accumulated significant bank data over the years through their Call Report. Their Call Reports are hundreds of pages long in comparison to the very high-level data we gather from our credit unions in the 20 to 30 page range." So, the dearth of detailed information is one factor limiting NCUA's preparedness.

Hunt further points out the difference in staff expertise. He states that FDIC has "acquired resources where they possess the skills and expertise," which NCUA does not possess and will need to acquire. He notes that stress tests are not generic exercises and require considerable judgement.

He also says that "[i]t would require an investment in analytical software that we currently don't possess." This would be an additional expense for the agency, if it decides to allow credit unions to conduct their own stress tests.

1 comment:

  1. Dont look now but you, scott hunt and jim blaine all think the federal reserve should conduct the stress test and supervise large credit unions.
    Hample better trot out one of those white papers that only he understands.

    ReplyDelete

 

The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.