Credit Unions Say Risk-Based Capital Hurts Farmers
More than 20 credit unions from seven Midwest states told the NCUA the proposed risk-based capital rule would hurt their operations.
“We have a long, established and proven history of providing safe and sound agricultural lending to our members,” the letter said. “Credit unions that serve rural America by making safe, low priced loans to farmers will be severely impacted by the risk-based capital rule if it is adopted as proposed. This negative impact is largely due to the tiered approach placed on member business loans.”
The 22 credit unions that signed the letter are located in North and South Dakota, Indiana, Kansas, Minnesota, Nebraska and Wisconsin.
In addition to the letter from agricultural based credit unions, Credit Union Association of the Dakotas submitted a video comment letter to the NCUA on Friday, which included Dakota credit union CEOs addressing the potential effect on the proposed rule in their communities.
“Nearly half of the credit unions in the Dakotas over $50m in assets are exempt from the MBL cap because they have historically been agricultural lenders, and many others are low income designated credit unions,” said a press release about the video. “As such, the proposed rule has a disproportionately deleterious impact on them.”
Approximately two-thirds of the state-regulated credit unions in North Dakota were originally chartered to provide communities with agricultural business loans. These credit unions were granted exemption from the current 12.25% member business lending cap.