Published in: CUNA CFO Councils
Between ongoing responsibilities and increasing regulatory rules, credit union CFOs and financial managers are busier than ever. For most, the best way to keep up is to prioritize projects and initiative, but many do so according to what’s required, not necessarily according to value, especially as it relates to regulations.
Take capitals stress testing, for example. Only the largest credit unions currently are required to perform this function, yet it offers great value to all institutions.
Consider this: Annual stress tests help ensure that credit unions have adequate capital to survive a global or regional financial crisis, enabling them to quickly adjust their balance sheets. They also offer important insights into an institution’s financial position and regulatory requirements.
Background
The “Dodd-Frank Wall Street Reform and Consumer Protection Act” includes a provision requiring federally insured credit unions with at least $10 billion in assets to adhere to the Dodd-Frank Act Stress Testing (DFAST) regulation, which is enforced by the NCUA. Also as a result of Dodd-Frank, the Federal Reserve Board created the Comprehensive Capital Analysis and Review (CCAR) rule, which applies to bank-holding companies with assets of $50 billion or more.