2013-18088. Agency Information Collection Activities: Submission to OMB for Reinstatement, Without Change, of a Previously Approved Collection; Comment Request

AGENCY:

National Credit Union Administration (NCUA).

ACTION:

Request for comment.

SUMMARY:

The NCUA intends to submit the following information collection to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. Chapter 35). This information collection is published to obtain comments from the public. On March 22, 2010, the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and National Credit Union Administration (the agencies) published in the Federal Register a joint final notice (75 FR 13656) implementing the guidance effective on May 21, 2010. The Guidance reiterates the process that institutions should follow to appropriately identify, measure, monitor, and control their funding and liquidity risk. In particular, the Guidance re-emphasizes the importance of cash flow projections, diversified funding sources, stress testing, a cushion of liquid assets, and a formal well-developed contingency funding plan (CFP) as primary tools for measuring and managing liquidity risk. The agencies expect all financial institutions ^[1] to manage liquidity risk using processes and systems that are commensurate with the institution's complexity, risk profile, and scope of operations. Liquidity risk management processes and plans should be well documented and available for supervisory review. Failure to maintain an adequate liquidity risk management process is considered an unsafe and unsound practice.

DATES:

Comments will be accepted until September 27, 2013.

ADDRESSES:

Interested parties are invited to submit written comments to the NCUA Contact and the OMB Reviewer listed below:

NCUA Contact: Tracy Crews, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428, Fax No. 703-837-2861, Email: [e-mail].

OMB Contact: Office of Management and Budget, ATTN: Desk Officer for the National Credit Union Administration, Office of Information and Regulatory Affairs, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT:

Requests for additional information, a copy of the information collection request, or a copy of submitted comments should be directed to Tracy Crews at the National Credit Union Administration, 1775 Duke Street, Alexandria, VA 22314-3428, or at [phone].

SUPPLEMENTARY INFORMATION:

I. Abstract and Request for Comments

NCUA is amending/reinstating the collection for 3133-0180. The agencies have identified two sections of the Guidance that fall under the definition of an information collection. Section 14 states that institutions should consider liquidity costs, benefits, and risks in strategic planning and budgeting processes. Section 20 requires that liquidity risk reports provide aggregate information with sufficient supporting detail to enable management to assess the sensitivity of the institution to changes in market conditions, its own financial performance, and other important risk factors.

Section 14 of the Guidance states that institutions should consider liquidity costs, benefits, and risks in strategic planning and budgeting processes. Significant business activities should be evaluated for liquidity risk exposure as well as profitability. More complex and sophisticated institutions should incorporate liquidity costs, benefits, and risks in the internal product pricing, performance measurement, and new product approval process for all material business lines, products and activities. Incorporating the cost of liquidity into these functions should align the risk-taking incentives of individual business lines with the liquidity risk exposure their activities create for the institution as a whole. The quantification and attribution of liquidity risks should be explicit and transparent at the line management level and should include consideration of how liquidity would be affected under stressed conditions.

Section 20 of the Guidance would require that liquidity risk reports provide aggregate information with sufficient supporting detail to enable management to assess the sensitivity of the institution to changes in market conditions, its own financial performance, and other important risk factors. Institutions should also report on the use of and availability of government support, such as lending and guarantee programs, and implications on liquidity positions, particularly since these programs are generally temporary or reserved as a source for contingent funding.

The documentation required by the Guidance is maintained by each institution; therefore, it is not collected or published by the National Credit Union Administration. These recordkeeping requirements are documented on occasion. Credit union examiners verify compliance with this recordkeeping requirement during examinations. The recordkeeping information gathered during the examination process informs examiners about the safety and soundness of the financial institution's funding and liquidity risk management practices.

The NCUA requests that you send your comments on this collection to the location listed in the addresses section. Your comments should address: (a) The necessity of the information collection for the proper performance of NCUA, including whether the information will have practical utility; (b) the accuracy of our estimate of the burden (hours and cost) of the collection of information, including the validity of the methodology and assumptions used; (c) ways we could enhance the quality, utility, and clarity of the information to be collected; and (d) ways we could minimize the burden of the collection of the information on the respondents such as through the use of automated collection techniques or other forms of information technology. It is NCUA's policy to make all comments available to the public for review.

II. Data

Title: Interagency Policy Statement on Funding and Liquidity Risk Management.

OMB Number: 3133-0180.

Form Number: None.

Type of Review: Reinstatement, without change, of a previously approved collection.

Description: The agencies have identified two sections of the policy statement that fall under the definition of an information collection. Section 14 states that institutions should consider liquidity costs, benefits, and risks in strategic planning and budgeting processes. Section 20 requires that liquidity risk reports provide aggregate information with sufficient supporting detail to enable management to assess the sensitivity of the institution to changes in market conditions, its own financial performance, and other important risk factors.

Respondents: Federally Insured Credit Unions.

Estimated No. of Respondents/Record keepers: 6,753 total (4 large credit unions ($10 to $100 billion in assets), 769 mid-sized institutions ($250 million to $10 billion), and 5,980 (less than $250 billion)).

Estimated Burden Hours per Response:

• Section 14: 240 hours per large respondent, 80 hours per mid-size respondent, and 20 hours per small respondent.
• Section 20: 2 hours per month.

Estimated Total Annual Burden Hours: 344,152 hours.

Estimated Total Annual Cost: Not applicable—usual and customary business

By the National Credit Union Administration Board on July 23, 2013.

Mary Rupp,

Secretary of the Board.

Footnotes

1.  This interagency guidance uses the term “financial institutions” or “institutions” to include banks, saving associations, credit unions, affiliated holding companies, state and federally chartered U.S. branches and agencies of foreign banks, and Edge and agreement corporations.