ALEXANDRIA, Va. — Approximately 45% of federally insured credit unions would have to develop extensive interest rate risk management policies that include extensive use of risk measurement systems and internal controls, according to a rule issued by the NCUA on Thursday.

Those credit unions covered by the rule would have to: Adopt an interest-rate risk policy; have a plan for the policy to be implemented by the institution's management and overseen by the board; put in place risk measurement systems to assess the sensitivity of earnings and/or asset and liability values to interest rate risk; adopt internal controls to monitor adherence to interest rate risks; and make decisions that are “informed and guided by interest rate risk measures.''

The rule applies to all FICUs with assets of more than $50 million. Those institutions with assets of between $10 million and $50 million must comply if the total of first mortgage loans they hold combined with total investments with maturities greater than five years is greater than 100% of their net worth.

NCUA Chairman Debbie Matz said at Thursday's NCUA Board meeting that the rule, which was first proposed last year, is needed because while “banks have steadily reduced their interest rate risk exposure since 1995, credit unions have increased their exposure by more than 50%.''

She noted that credit unions hold nearly 31% of their assets in long-term fixed-rate mortgages, compared to only 18% at banks.

Larry Fazio, who runs the agency's Office of Examination and Insurance, said interest rate risk has “long been a supervisory expectation,'' but the rule is needed in light of the added risks that credit unions face.

He added that the agency has seen a “continual increase,'' in credit unions taking more risks and this could increase the exposure of the NCUSIF, which is why the rule is necessary.

The issue of interest-rate risk has been dealt with by all bank regulators. Recently, the NCUA, the Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency issued a joint letter urging aggressive steps to monitor the risk.