Panel Debates Risk-Based Capital: Onsite Coverage
SAN FRANCISCO – A second comment period for the risk-based capital proposal would be necessary if the NCUA makes major changes to the final rule, according to CUNA Senior Vice President of Legislative Affairs Ryan Donovan.
“The comment period has been closed a month and they received 2,000 plus comments – many of them were quite long and complicated. I’m not sure that right now they need to be saying more. I would hope they are doing what Larry [Fazio] said they’re doing, which is analyzing all of the comments and figuring out what might work in a revision,” Donovan told CU Times after he participated in a panel session on the topic at CUNA’s America’s Credit Union Conference.
“They need to take their time. I think it would benefit everyone for them to complete their analysis on the comments. Listen to what credit unions are saying and take their time to carefully recalibrate the proposal and hopefully put it out for comment again,” he added.
Credit union executives requested the NCUA permit a second comment period during the listening session in Los Angeles last week but NCUA Board Chairman Debbie Matz said the agency is not considering one at this time. However, after Matz heard the request repeatedly from credit union executives, she replied she would take it under advisement.
Joining Donovan in the panel discussion were CUNA executives Mike Schenk, interim chief economist, Bill Hampel, interim president/CEO, Mary Dunn, senior vice president and deputy general counsel, and Larry Fazio, director of the NCUA Office of Examination and Insurance.
“It’s a bad solution looking for a problem,” Schenk said of the proposal.
Dunn said the NCUA has a job to do but CUNA disagrees on how the proposed rule should be implemented.
“We think this proposal is one of the most significant proposals, perhaps in the next 10 years – hopefully in the next 10 years, let’s put it that way,” said Dunn.
“2,058 letters were filed with NCUA – that is a record – it’s an unprecedented number and I think it’s because credit unions really realize the significance of the proposal,” she added.
“I’m glad we could help you achieve a record of number of comment letters,” Fazio said to laughter from the audience.
An audience member asked Fazio why the NCUA is rushing to finalize a risk-based capital rule.
“Could you re-write the proposal and come back to us and have another comment period?” Fazio was asked.
“The time period will be as long as it takes and I don’t know how long it will take,” Fazio said.
Fazio told the audience there are a few areas the NCUA knew it would end up recalibrating in the final rule.
“I think we’ve got some opportunities in the commercial lending space, member business loans, especially in terms of the concentration, probably some fine tuning to do in real estate,” Fazio said.
He also said the agency would take a look at how it handles equity exposures in the proposal.
“We are listening. Everything is on the table,” he said.
An audience member told Fazio that every dollar his credit union holds to comply with new capital requirements is a dollar not returned to its members.
“If we’re going to increase the capital requirements, we need to be looking at different ways of raising capital to support those requirements,” he added.
Fazio said the NCUA supports the proposed supplemental capital bill in Congress.