CUNA: NCUA Listening To RBC Concerns
CUNA President/CEO Bill Hampel and Deputy General Counsel Mary Dunn said they had a very productive meeting with NCUA Chairman Debbie Matz on Thursday about the proposed risk-based capital rule.
“They’re certainly willing to listen. Rather than focusing on what we think is wrong about the proposal, we really focused on how we think it can be fixed and improved,” Dunn said on Monday during a press call.
Dunn said the top improvements CUNA advocated for include reducing the risk-based capital component for well-capitalized credit unions and making the 1% NCUSIF deposit part of the risk-based capital calculation.
In addition, CUNA proposed changes to the proposal’s risk weights.
She also said the NCUA’s definition of a complex credit union is far too broad.
“It should be narrowed so that fewer institutions are part of the final rule,” she said.
Dunn said CUNA also met with NCUA General Counsel Mike McKenna and Board Member Rick Metsger in separate meetings.
Dunn is also meeting with Director of the Office of Examination and Insurance Larry Fazio on Monday.
Based on his experience in the meeting with Matz, Hampel said he has the impression the agency is considering a number of changes to the proposed rule.
“We didn’t get into any specifics with them about what aspects would be change, but we came back feeling quite positive that we were able to fully get on the table a lot of our concerns with some explanation and that they are seriously considering a number of changes,” Hampel said.
Matz told CU Times on Thursday that more than a few of the risk weight in the proposed would be changed in the final version of the rule.
“I really can’t comment about the specific changes at this point, but we know that we need to change some of the weights, probably more than a few will be revised,” Matz said in a video interview after the NCUA board meeting.
“We need to take a close look at the implementation period, because not only do the credit unions need more time, but NCUA needs more time to get ready for it. So those are some of the things we’re thinking of, but we will respond to all of the comments as we are required to do. We won’t make every change that’s been suggested, but certainly we will be making a lot of changes to this rule,” she added.
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Rep. Shelley Moore Capito (R-W.Va.), chairman of the Subcommittee on Financial Institutions and Consumer Credit, told the NCUA a one-size-fits-all approach to a final risk-based capital rule could hurt credit availability for members.
“While we agree that a credit unions' concentration risk should be closely monitored, it is our understanding that this risk is considered as part of the supervisory and examination process,” the lawmakers said in a letter to Matz dated June 20.
“To the extent that NCUA examiners already have the ability to mitigate concentration risk through other regulatory actions, it appears that the inclusion of concentration risk as part of the calculation of capital rules could be redundant and place credit unions at a competitive disadvantage relative to other insured depository institutions. We are concerned such a one-size-fits-all approach could result in less credit availability for credit union members,” the letter also said.
The lawmakers advised the NCUA to examine the economic impact that easing concentration risk through capital requirements would have on the availability of credit.
Hensarling and Capito called the proposed 18-month implementation period unnecessarily short.
“An extended implementation period will not only allow credit unions more time to raise capital, if needed, but it will also allow all affected credit unions sufficient time to adjust their internal systems to be in compliance with the final risk weights,” the letter said.