HR 2769: A Vital Step for Credit Unions in the RBC Debate
The introduction of the "Credit Union Risk-Based Capital Study Act of 2015" by Reps. Stephen Fincher (R-Tenn.), Bill Posey (R-Fla.), and Denny Heck (D-Wash.), is a vital and important step for credit unions in the industry’s effort to stop the NCUA’s ill-advised and unneeded risk-based capital regime. The proposed bipartisan legislation seeks to compel the NCUA to finally quantify the necessity, legality and impact of the agency’s proposal. Further, it would require the NCUA to report and justify its reasoning to Congress. NAFCU views this legislation as crucial because a change as significant as imposing a risk-based capital regime on the industry deserves maximum scrutiny from both the agency and Congress before any final rulemaking.
The “Credit Union Risk-Based Capital Study Act of 2015” would require the NCUA to study and report to Congress on whether the agency has the clear legal authority to issue a two-tier proposal, how RBC2 compares to bank capital requirements, the rationale behind the risk-weighting used by the agency and the impact the proposal will have on credit unions’ capital cushions. The agency would not be able to finalize or implement RBC2 before 120 days after the report goes to Congress. The bill would allow credit unions to voluntarily provide the NCUA with information supporting their response to the bill, but the agency may not require participation by any institution during the response process.
Why now? Waiting for an imperfect rule rather than pursuing legislative intervention now is plain madness. Frankly, credit unions should not have to wait for the NCUA’s second risk-based capital proposal to be finalized to seek legislative relief from the agency’s attempt at regulatory overreach that will cost them hundreds of millions of dollars. Simply put, credit unions cannot afford to “wait and see.”
NAFCU, since the first proposal, has launched a comprehensive campaign to address concerns with the agency and on Capitol Hill in order to ensure that credit unions ultimately end up with the best capital system possible. NAFCU is committed to doing whatever it takes to achieve a true risk-based capital system that reflects lower capital requirements for lower-risk credit unions and higher capital requirements for higher-risk credit unions.
We have repeatedly asked the NCUA to stand with us in achieving this goal, and believe that the agency should work with Congress and the industry to establish such a system, instead of promulgating a rule. The “Credit Union Risk-Based Capital Study Act of 2015” serves as a meaningful and timely step in ensuring that credit unions will be able to continue to lend and to grow to the best of their ability.
Carrie Hunt is Senior Vice President of Government Affairs and General Counsel for NAFCU.