NASCUS President and CEO, Lucy Ito’s Statement on the NCUA Board Meeting

FOR IMMEDIATE RELEASE
October 22, 2021

NASCUS President and CEO, Lucy Ito’s Statement on October 21st NCUA Board Meeting

ARLINGTON, Va. — NASCUS President and CEO Lucy Ito provided a statement today in regard to the NCUA Board meeting addressing NCUA’s 2022 InTrexCU rollout, separating sensitivity to market risk from the ‘L’ component with an update of CAMELS and CUSO rule expanding powers.

“NASCUS applauds NCUA’s comprehensive approach to fostering credit union cybersecurity resilience.  In addition to NCUA’s enhanced ACET self-assessment tool, NASCUS supports the agency’s plan for rolling out InTRExCU in 2022.  Several state agencies are already utilizing FDIC’s InTREx tools in state credit union IT examinations.  This early adoption of InTREx in state regulator supervisory programs combined with NCUA’s InTRExCU pilot, together, provide proof of concept for the relevance and value of adopting InTREx more broadly as a tool for evaluating credit union cyber hygiene and exposure.  With most credit union CEOs citing cybersecurity risks as their greatest concern, utilizing a proven, scalable examination tool such as InTREx should be a welcome addition to the national credit union system’s collective arsenal.

In some states, CUSOs owned by state credit unions already hold expanded lending powers with benefits accruing to consumer-members and participating credit unions, alike, without raising safety and soundness nor consumer protection concerns.  NASCUS, accordingly, views the final rule as a natural evolution in a robust dual charter system.  However, we note that, as finalized, the CUSO rule includes additional reporting requirements which could impact state-chartered credit unions in considering whether to collaborate with FCU investors in the formation and ownership of a CUSO.  An additional concern is whether the rule adds new reporting requirements to state credit union CUSOs, as a result of expanding federal credit union CUSO powers.  There would something wrong with such a picture.  NASCUS will review the final rule closely and looks forward to working with NCUA to resolve any unintended, negative impacts on state credit union CUSOs.

NASCUS applauds the NCUA Board’s plan to implement CAMELS, separating sensitivity to market risk from the ‘L’ component—a policy position we have been encouraging NCUA to adopt for the last five years.  We thank Board Member Hood for heeding our recommendation and introducing the proposed rule earlier this year.  To date, 25 states have implemented CAMELS and two additional states are scheduled to do so by January 1, 2022.  Without exception, all states that have already adopted CAMELS report a very smooth and seamless transition for credit unions including smaller asset sizes as all credit unions are already monitoring market risk under the L component.  Indeed, under CAMEL, credit unions can be ‘dinged’ unfairly.  If their liquidity and sensitivity to market risk are rated differently, the lower rating will prevail for the L component.  The addition of the ‘S’ component will not only be fairer, it will also position both credit unions and examiners to more effectively monitor and evaluate interest rate risk as the U.S. enters an uncertain interest rate environment.”

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