12 CFR 741.233 (Cross Ref 1007) (1-1-19 ED)

§ 741.223

12 CFR Ch. VII (1–1–19 Edition)

and selling negotiable checks, including travelers checks, money orders,
and other similar money transfer instruments (including international and
domestic electronic fund transfers and
remittance transfers, as defined in section 919 of the Electronic Fund Transfer Act, 15 U.S.C. 1693o-1), to persons eligible for membership in any credit
union having a loan, investment or
contract with the entity. A CUSO also
includes any entity in which a CUSO
has an ownership interest of any
amount, if that entity is engaged primarily in providing products or services to credit unions or credit union
members.
(b) This section shall have no preemptive effect with respect to the laws
or rules of any state providing for access to CUSO books and records or
CUSO examination by credit union regulatory authorities.
[78 FR 72550, Dec. 3, 2013]

§ 741.223 Registration of residential
mortgage loan originators.
Any credit union which is insured
pursuant to title II of the Act must adhere to the requirements stated in part
1007 of this title (Regulation G).
[75 FR 44704, July 28, 2010, as amended at 78
FR 32545, May 31, 2013]

§ 741.224 Golden parachute and indemnification payments.
Any credit union insured pursuant to
title II of the Act must adhere to the
requirements stated in part 750 of this
chapter.
[76 FR 30517, May 26, 2011]

§ 741.225 Loan participations.
Any credit union that is insured pursuant to Title II of the Act must adhere to the requirements stated in
§ 701.22 of this chapter, except that federally insured, state-chartered credit
unions are exempt from the requirement in § 701.22(b)(4).
[78 FR 37958, June 25, 2013]

APPENDIX A TO PART 741—GUIDANCE
FOR AN INTEREST RATE RISK POLICY
AND AN EFFECTIVE PROGRAM
TABLE OF CONTENTS
I. Introduction

A. Complexity
B. IRR Exposure
II. IRR Policy
III. IRR Oversight and Management
A. Board of Directors Oversight
B. Management Responsibilities
IV. IRR Measurement and Monitoring
A. Risk Measurement Systems
B. Risk Measurement Methods
C. Components of IRR Measurement Methods
V. Internal Controls
VI. Decision-Making Informed by IRR Measurement Systems
VII. Guidelines for Adequacy of IRR Policy
and Effectiveness of Program
VIII. Additional Guidance for Large Credit
Unions With Complex or High Risk Balance Sheets
IX. Definitions
I. INTRODUCTION
This appendix provides guidance to FICUs
in developing an interest rate risk (IRR) policy and program that addresses aspects of
asset liability management in a single
framework. An effective IRR management
program identifies, measures, monitors, and
controls IRR and is central to safe and sound
credit union operations. Given the differences among credit unions, each credit
union should use the guidance in this appendix to formulate a policy that embodies its
own practices, metrics and benchmarks appropriate to its operations.
These practices should be established in
light of the nature of the credit union’s operations and business, as well as its complexity, risk exposure, and size. As these elements increase, NCUA believes the IRR practices should be implemented with increasing
degrees of rigor and diligence to maintain
safe and sound operations in the area of IRR
management. In particular, rigor and diligence are required to manage complexity
and risk exposure. Complexity relates to the
intricacy of financial instrument structure,
and to the composition of assets and liabilities on the balance sheet. In the case of financial instruments, the structure can have
numerous characteristics that act simultaneously to affect the behavior of the instrument. In the case of the balance sheet, which
contains multiple instruments, assets and liabilities can act in ways that are
compounding or can be offsetting because
their impact on the IRR level may act in the
same or opposite directions. High degrees of
risk exposure require a credit union to be
diligently aware of the potential earnings
and net worth exposures under various interest rate and business environments because
the margin for error is low.

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