updated 07/29/13 03:45 PM
Highlights Concerns, Recommendations
The California and Nevada Credit Union Leagues have submitted a comment letter to the National Credit Union Administration (NCUA) on the agency's proposed derivatives rule.
Sharon Lindeman, Vice President of Regulatory Advocacy for the California and Nevada Credit Union Leagues
"While the Leagues support a derivatives program for the purpose of hedging interest rate risk (IRR), we have heard from a number of credit unions concerned with the potential precedent-setting fee system proposed in the rule, as well as questioning whether the rule is too restrictive to be a viable IRR mitigation tool," said Sharon Lindeman, vice president of regulatory advocacy for the Leagues.
The Leagues’ letter echoes these concerns with the proposal, and several others, and it also makes recommendations for improvement. The Leagues strongly oppose the imposition of any application fees and supervision and/or examination fees to maintain a derivatives program.
The Leagues also expressed concern that the proposed investment and duration limitations are too constraining, do not provide the capacity for hedging interest rate risks, and will ultimately deter credit unions from participating in such a limited derivatives program. Instead, the Leagues recommend that investment and duration limitations be set by a credit union’s board-approved derivatives policy.
These are just two of the issues raised in the Leagues’ comment letter. Credit unions are invited to review the letter.
The Leagues and the Credit Union National Association (CUNA) comment to the NCUA and other regulators on behalf of member credit unions.
"We also strongly encourage credit unions to submit comment letters to the regulators as well," Lindeman said. "It is their voices that will make a difference."
In the latest NCUA Report, Board Member Michael Fryzel said, “I expect many comments from the trade organizations, but what I am really interested in are comments from any stakeholders who would be affected by this rule directly."
Credit unions can use PowerComment to find up-to-date and easily digestible information on current proposed rules; participate in discussion boards with other PowerComment users and the Leagues’ staff to increase their understanding of proposed rules; and write comment letters to regulators and immediately submit them. Use PowerComment today to let your voice be heard!
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