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ALEXANDRIA, Va.-While NAFCU’s official comment letter was generally supportive of NCUA efforts to create a tiered restoration plan, CUNA said that plan needs to be restructured. CUNA wrote NCUA with its own proposal for net worth restoration plans for credit unions that fall below Prompt Corrective Action’s 6% capitalization, saying that NCUA’s proposed rule is not responsive to the issue. NCUA’s 1st Tier plan would require only four quarters of projections rather than two years under a standard net worth restoration plan; would not require a specific step in obtaining net worth targets as a standard plan does; and would not require those steps beyond obtaining “adequately capitalized” status as a standard plan does. “We appreciate the Board’s efforts to consider those concerns and consider innovative approaches in response,” CUNA Chief Economist Bill Hampel wrote in the organization’s official comment letter. “However, in our view the Tier I Net Worth Restoration Plan is not responsive to credit unions’ concerns and will not afford meaningful relief. Hampel wrote that the agency has misinterpreted the Federal Credit Union Act and does not need to review net worth restoration plans on a case-by-case basis to determine if the plan is based on realistic assumptions. He also stated that disallowing a choice of denominator in determining a credit union’s net worth ratio would drastically reduce the number of eligible credit unions, among other issues the trade group had with the proposal. CUNA suggested a system for net worth restoration for credit unions slightly below 6% capital that would require a greater net income proportional to a lower net worth ratio and would shield credit unions adhering to earnings retention requirements from discretionary supervisory actions and other negative consequences. On the other hand NAFCU supported the board’s proposal, which aims at abbreviating net worth restoration plans for credit unions that fall just slightly below “adequately capitalized” for PCA. “The development of 1st tier NWRPs demonstrates NCUA’s commitment to regulate credit unions without applying a one-size-fits-all approach,” NAFCU President and CEO Fred Becker wrote. NAFCU supported the proposed criteria for 1st tier eligibility. NCUA should clarify whether a credit union can appeal a denial from NCUA, Becker wrote, and should consider an appeals process if none was intended. NAFCU also supported requiring only four quarters of projections. [email protected]

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