Trades Dismiss NCUA Response on RBC
NAFCU and CUNA criticized the NCUA’s response to a letter from more than 75% of the House of Representatives, which outlines the lawmakers’ issues with the agency’s proposed risk-based capital rule.
“The agency’s claims of comparability with FDIC standards regarding risk weights ring hollow; NCUA’s calculations are far more severe for credit unions,” said NAFCU President/CEO Dan Berger Friday.
“We hope that this is indeed an area which they will review given the thousands of comment letters they have received from credit unions that address the potential devastating impact, specifically concerning real estate loans, member business loans and other investments,” he added.
Berger said the agency is underestimating the effect of the proposal on credit unions’ capital cushion.
“The proposal affects not hundreds but thousands of federally insured credit unions, which will be required to adjust their balance sheets or raise more capital to comply with proposed rule,” he said.
In response to the lawmakers’ letter, NCUA Board Chairman Debbie Matz questioned trade association estimates of the cost of the proposed risk-based capital rule, claiming the groups were disseminating misinformation.
NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt told CU Times her organization stands behind its calculations.
“Based on our response on data analysis and based on information provided to us directly from our members, we stand by our estimates,” she said.
Berger said the credit union industry would be better served if the agency withdrew the current rule.
“If NCUA were to move forward on this proposed rule, the agency would need to make significant changes based on the numerous recommendations put forth in the almost 2,000 comment letters submitted,” he said. “The new proposal would be so different it would require a new comment period to be properly vetted by credit unions.”
CUNA also stands by its estimate that the proposal could prompt as much as $7.3 billion in more capital to retain current margins.
“Congress is concerned that NCUA is proposing risk-weights that are, in some cases, more stringent than the standards imposed on small banks,” said CUNA President/CEO Bill Cheney.
“They don't want a rule that has a significant adverse impact on otherwise very healthy credit unions; and they want credit unions to have more than enough time to comply with the rule. It is critical that NCUA respond to these concerns not only with today’s letter, but with meaningful changes to the final rule,” he added.
Cheney strongly encouraged the NCUA Board to carefully consider the opinions of the lawmakers who worked on the Credit Union Membership Access Act of 1998, H.R. 1151.
“Former Banking Committee Chairman Alphonse D'Amato, former Senator Richard Bryan and former Speaker Newt Gingrich, all have expressed concern that the proposed rule would exceed the authority conveyed to NCUA in 1998. The Congressional intent is clear in the minds of these lawmakers, and the final rule should be consistent with that intent,” he said.