NCUA Chairman Debbie Matz told Credit Union Times on Thursday that roughly 200 credit unions will have to change their portfolio as a result of the NCUA’s proposed risk-based capital rule that was introduced at the agency’s monthly board meeting.
She also said “chronic late filers” of call reports will be penalized.
According to the proposed risk-based capital rule, to be classified as well capitalized, credit unions with over $50 million in assets would be required to maintain a risk-based capital ratio of 10.5% or above, and pass both net worth ratio and risk-based capital ratio requirements.
“Most credit unions will not be adversely affected by this rule. There are only about 200 credit unions that will be required to change their portfolio as a result of this rule,” said Matz after the board meeting on Thursday.
“The others will be positively impacted because there will be fewer losses as a result of the changes that those other 200 credit unions have to make. So I think that there will be a positive reaction once people sit down and actually read and understand what we’re proposing,” she added.
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The NCUA board also unanimously approved a final rule on derivatives at the meeting. Matz downplayed concerns among credit unions about the cost of the rule.
“We have eliminated the application fees that were proposed when we proposed the rule and the supervision fees that were being contemplated so those are not in the final rule and any costs that we accrue will be paid for out of the share insurance fund,” Matz told Credit Union Times.
“So there will not be an assessment to the industry or to individual credit unions but I think the cost is really a small price to pay for the safety of the industry,” she added.
Last week, the NCUA announced its decision to impose penalties against credit unions that miss the deadline for filing call reports. Credit Union Times asked Matz if the NCUA should have taken a different approach to deter late filing.
“If there was a better way, I would like for somebody to tell me what it is because we have been warning credit unions and discussing this issue with them for a very long time,” Matz said. “I was really astounded to discover that there were over 1,700 credit unions that filed late last quarter and many of them were chronic late filers and in fact the number had gone up significantly year over year.”
Matz assured credit unions that the regulator is not enforcing the fines to be punitive since the money generated from penalties goes to the Treasury.
“The goal is to get compliance because we can’t do our job if the credit union data straggles in,” Matz said.
"We're not going to assess a penalty without previous discussions with the credit unions executives to find out why it was late and what can be done about it but for chronic late filers, there will be penalties,” she also said.