Minnesota Congressman Opposes RBC Proposal
Rep. Erik Paulsen (R-Minn.) said the NCUA’s proposed risk-based capital rule would cause many credit unions in his state to raise lending and financial services fees as well as reduce dividend payments to members.
“Before proceeding with a final rule, I would encourage the NCUA to take into account the economic impact of this added burden on the state’s credit unions,” Paulsen wrote Monday in a letter to NCUA Board Chairman Debbie Matz.
The House Ways and Means committee member said 9% of his state’s credit unions covered under the rule, would fall from well-capitalized to adequately-capitalized. He said many of these credit unions would have to raise additional capital to comply.
Paulsen urged the NCUA to clarify why the proposal differs from the standards applied to other community financial institutions.
“The proposal contains risk weightings that include concentration-based weight which, at higher levels, would be considerably higher than those applied under the Basel system for banks,” he wrote. “I am concerned that this will unnecessarily hinder credit union lending to homeowners and small businesses in Minnesota.”
Paulsen recommended the NCUA extend the proposed 18-month transition period so Minnesota credit unions have more time to raise enough capital to meet the final rule’s requirements.