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NCUA staff briefed the NCUA Board on the recommendation to add an "S" rating for credit unions' sensitivity to market risk to the CAMEL Rating System during its open board meeting today.

NCUA's inspector general office last November recommended adding "S" to CAMEL to "improve interest rate risk clarity and transparency." The agency has since formed a working group to look at how to oversee interest rate risk from a supervision standpoint, and it has developed a IRR Supervisory Test.

NCUA said the IRR Supervisory Test would establish four risk categories – low, medium, high and extreme – and focus its supervisory attention on the extreme category. NCUA would also rely to an extent on credit unions' in-house stress tests.

NAFCU expects to see guidance from NCUA on the interest rate risk component later in the summer, and it expects examiner training to conclude in the fall, with a roll-out of new supervision procedures by year-end.

The board also voted 2-0 to propose a rule on technical amendments to the Community Development Revolving Loan Fund rule and an interim final rule on the statutory inflation adjustment of civil money penalties ordered by the agency, according to the published agenda.

NCUA Chairman Rick Metsger spoke at NAFCU's Annual Conference and Solutions Expo in Nashville on Wednesday, where he announced the agency will hold a public briefing in October and release the details of the 2017-2018 budget plans beforehand. Read more here.