Board Perspectives
INTEREST RATE RISK POLICY AND PROGRAM:
THE NCUA RULE
BY GIGI HYLAND, NCUA BOARD MEMBER
In January 2012, NCUA approved a
final rule requiring all federally insured
credit unions to maintain a written
interest rate risk (IRR) policy as part of
an effective IRR management program. The rule applies to
all federally insured credit unions (FICUs) with assets equal to
or greater than $50 million and to FICUs with assets between
$10 million and $50 million—if first mortgages plus
investments with maturities greater than 5 years equal or
exceed 100 percent of net worth. This measure is called the
Supervisory IRR Threshold (SIRRT) ratio.
The rule is a condition of insurance (Part 741) and becomes
effective Sept. 30, 2012. In an appendix to the rule, NCUA
provided guidance to assist FICUs in writing an IRR policy
and implementing an effective IRR management program.
Does the fact the new rule requirement is a condition of
insurance mean NCUA is going to cancel insurance solely
over concerns about interest rate risk? No, of course not. The
requirement is a condition of insurance because it uniformly
applies to federal and state charters. And IRR is a core risk
confronting FICUs, similar to lending and investment risks.
CONTINUED ON PAGE 9
THE RITES OF SPRING
BY MICHAEL E. FRYZEL, NCUA BOARD MEMBER
One of the most pleasant times of the
year is springtime. The weather starts to
get warmer, buds appear on the trees,
flowers start to bloom, and it is again
time for the Governmental Affairs
Conference (GAC).
Thousands of credit union representatives come to
Washington to hear numerous speeches, attend various
workshops, network with their counterparts from across the
country, enjoy the sights and sounds of our nation’s capital,
and take part in a ritual called “hike the hill.”
I have often said that this annual venture needs to be followed
by frequent and continued visits to the district offices of our
elected officials. Your ultimate goal will only be accomplished
by perseverance, hard work, and a dedication to accomplish
your ultimate objectives. But the place to start achieving your
goal is in Washington, DC. And you must not let the
opportunity pass.
I really do not know who coined the phrase, but it has caught
on with everyone who attends the GAC. It presents a great
opportunity for the credit union industry to walk to the top
of our nation’s capital and meet with our elected
representatives and senators, as well as with appointed
federal regulators.
Make the time to see your Congressman. Call ahead and
make an appointment. Do not take no for an answer. And
when you get there, take advantage of the opportunity. Be
courteous and complimenting. Educate and explain. And be
firm in the story you need to tell and the commitment you
are looking for. Thank them for their time, and let them know
you will be following up.
It is a unique opportunity to walk the halls of Congress,
shake the hand of your Congressman, and sit down with our
leaders and explain to them all credit unions do for the
people of this country.
As you prepare for this all important “hike” energize yourself
with the scent and beauty of the cherry blossoms. Put on your
comfortable shoes and “hike the hill.” Spring seems to
rejuvenate all that lay dormant through the winter and brings
about a sense of new beginnings. Let it rejuvenate your
commitment to make it the best year yet for credit unions and
their members.
The NCUA Report is published by the
National Credit Union Administration,
the federal agency that supervises
and insures most credit unions.
Debbie Matz, Chairman
Christiane Gigi Hyland, Board Member
Michael E. Fryzel, Board Member
Office of Public & Congressional Affairs
John Zimmerman, Editor
jzimmerman@ncua.gov
National Credit Union Administration
1775 Duke Street, Alexandria, VA 22314-3428
