Tuesday, September 24, 2013

Disclosing Stress Testing Results

In a speech at the National Association of State Credit Union Supervisors’ annual State System Summit, National Credit Union Administration Board Chairman Debbie Matz announced the agency is drafting a proposed rule to require annual stress tests at credit unions with assets exceeding $10 billion.

There are currently four credit unions with at least $10 billion in assets with a fifth credit union nearing the threshold.

However, according to the NCUA press release, the agency has not made a decision about requiring the results of the stress test to be made public.

Section 165(i)(2) of the Dodd-Frank Act requires publication of a "summary" of the results of the stress tests for covered institutions. However, credit unions are not covered by this section of the Dodd-Frank Act, so there is not a legislative mandate to publicly disclose the results.

While Matz acknowledges public disclosure would enhance transparency to members, she is worried that the results can be misinterpreted and lead to inaccurate conclusions about a credit union’s financial health.

But are Chairman Matz's concerns about disclosure overblown?

Federal Reserve Chairman Bernanke in an April 8, 2013 speech noted the benefits of disclosure by stating "the disclosure of stress test results and assessments provides valuable information to market participants and the public, enhances transparency, and promotes market discipline."


  1. "The FDIC works hard to nurse banks off of their problem bank list, so it’s important that this LIST BE KEPT CONFIDENTAL. On average, the vast majority (87 percent) of banks on this list come back to healthy status – continuing to make loans in their local communities."

    Contact: John Hall, ABA Public Relations (202) 663-5473 or jhall@aba.com

  2. "The fact that safety and soundness examinations have remained confidential clearly validates the need to keep these (Stress) tests confidential. It seems irresponsible to release stress test results that may indicate a bank or company is in trouble when the safety and soundness examination could show an exactly opposite condition."

    Beth Knickerbocker
    ABA Vice President and Senior Counsel



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.