March 13, 2014

Liquidity rule date near, supervisory guidance out

March 14, 2014 – NCUA yesterday sent credit unions its supervisory guidance to examiners under the agency's rule on liquidity and contingency funding plans, which takes effect this March 31.

The guidance, provided with NCUA Letter to Credit Unions 14-CU-05, gives insight to how the agency plans to examine credit unions for compliance with the rule. Also included is an AIRES checklist for liquidity risk management. AIRES is the agency's exam system.

Under the final rule:

  • all federally insured credit unions must maintain a basic liquidity policy;
  • credit unions with $50 million or more in assets must also have a contingency funding plan; and
  • credit unions with $250 million or more in assets, in addition to the above items, must establish access to at least one contingent federal liquidity source – the Federal Reserve discount window or Central Liquidity Facility, if not both.

This rule was finalized in October. At the time, NCUA staff said about 374 insured credit unions will need to either become a member of the CLF or secure access to the Fed's discount window to comply.

NAFCU told the agency it supports effective liquidity programs in credit unions but called the final rule unnecessary since credit unions are well-equipped to determine and see to their contingency funding needs.