Credit Unions: Proposed Reforms for Corporate Credit Union Regulation

GAO discussed proposed regulations for corporate credit unions. GAO noted that these revised regulations: (1) must go through a number of steps before they become final; (2) will have the desired impact only if the National Credit Union Administration vigorously enforces them; (3) narrow the financial risks that corporate credit unions can undertake; (4) require corporate credit unions to build a stronger capital base; (5) include more stringent requirements for stress testing and accounting for risky investments; (6) require that corporate credit unions sell investments when unrealized investment losses exceed one-half of primary capital; (7) require large corporate credit unions to establish an internal audit function and emphasize that board members oversee corporate management; and (8) may result in refocusing the mission of corporate credit unions.