Matz Pressed for Second Comment Period: Onsite Coverage
CHICAGO — NCUA Board Chairman Debbie Matz said Thursday she would allow a second comment period on the proposed risk-based capital rule, but only if the law requires it.
“We are doing a top to bottom review, and if after we do that review and look at our proposed changes … if under the Administrative Procedure Act, we determine that we are required to because we have made significant changes to the intent of the reg, we will,” Matz said during the agency’s Listening Session.
“But, if we determine that these are changes consistent with what we have proposed and it’s just really more of a fine tuning and we are not required to re-propose it, we probably will not,” she added.
“Maybe the law shouldn’t be the governing thing, maybe it should be what’s right for the credit unions,” a credit union executive said to applause from the audience of approximately 160.
“You may have a perspective about running a credit union and I think you all do a fine job of running your credit unions, but you’re not standing in our shoes as regulators. And you’re not held accountable for the safety and soundness of the system,” Matz responded.
When asked again later in the event for a second comment period, Matz repeated a similar answer, adding that she has attended more meetings with members of Congress on the risk-based capital proposal than she can count.
Matz also pointed out that the agency has been working on the proposal for more than two years.
“If we don’t feel we need to put (a second comment period) out to comply with the APA, and because we have been working on this for two years – this has been two years in the making – and we don’t want to lose more time on doing something we feel is essential to the safety and soundness of the future of the system going forward, then we will not do that,” Matz said.
Board Member Michael Fryzel, who will soon leave the board but attended the event in his hometown of Chicago, disagreed.
"I personally see no reason why it shouldn't be out for a 30 or 45 day period, maximum, for them to look at it again and re-comment," Fryzel said after the Listening Session. "The issue here is to get this done right for the industry and for the regulator and taking a little extra time is not going to make any difference in the world. We are not in crisis mode."
Dave Larson, president/CEO of the $1.7 billion Affinity Plus Credit Union in Saint Paul, Minn., told CU Times the NCUA should offer credit unions a chance to comment again before the rule is finalized.
“As a cooperative system, I think we need as much cooperation as we can have and if there’s going to be significant changes from what’s already been proposed, I think we should have an opportunity to have more commentary on what those changes are,” Larson said.
NAFCU Regulatory Affairs Counsel P.J. Hoffman agreed.
“This rule is so important that it affects every part of a credit union’s business model. A second comment period makes sense. You want to get this right,” Hoffman said.
“It’s very hard and expensive to get it right after the rule is finalized. You want to get this right the first time,” he added.
During the Listening Session, another executive said the NCUA is pushing credit unions back 20 years with its risk-based capital proposal.
“You’re looking at it on a micro level. You are actually creating concentration risk,” he said.
In response, Matz said the agency is required to put out a rule on risk-based capital.
“The GAO told us we must do that,” she said. “Our own inspector general told us that we must do it.”
NCUA Director of Examination and Insurance Larry Fazio said the agency has to make sure the credit unions taking risks are holding enough capital.
“We’re trying to say you can take more risk but if it doesn’t work out, you need to have the ability to pay for it,” Fazio said.
In her closing remarks, Matz said, “We are not trying to put anyone out of business.”
In an interview following the event, NCUA Board Member Rick Metsger told CU Times some credit unions have forgotten about the current risk-based capital system during the debate over the agency’s proposed rule.
“We actually have it [risk-based capital] now. No one’s really talked about it because they have to do their own calculation and unless they are in trouble they do not hear from us,” Metsger said.