Matz's Response to Chairman Hensarling on Reputational Risk

In a June 12 letter, NCUA Chairman Matz wrote House Financial Services Committee Chairman Hensarling stating that reputational risk is one of seven key risks that examiners use in assigning a credit union's CAMEL rating.

She stated that NCUA does not pursue enforcement or other actions soley based on reputation risk.

The letter also noted that four key risks including reputation risk are qualitative and difficult to quantify.

She further wrote that NCUA does not force a credit union "to change its business practices simply on a reputation risk matter."

She concluded by writing that reputation risk is not a standalone indicator; but rather it is used with other qualitative and quantitative indicators to form the supervisory approach for a federally-insured credit union.