A heads-up worth repeating. Examiners worry about interest rate risk

If you read this blog on a regular basis, you probably noticed that I stay up nights obsessing about interest rate risk.

An interagency advisory issued by the Board of Governors of the Federal Reserve System and other federal regulators reminds institutions of supervisory expectations on sound practices for managing interest rate risk (IRR). Yes, it is directed at banks, but, at the risk of stating the obvious, it equally applies to credit unions.

The advisory does not constitute new guidance, says the FRB. It reiterates basic principles of sound IRR management that each of the regulators has codified in its existing guidance, as well as in the interagency guidance on IRR management issued by the banking agencies in 1996. The advisory highlights the need for active board and senior management oversight and a comprehensive risk-management process that effectively measures, monitors, and controls IRR.

The advisory targets interest-rate risk management at insured depository institutions.