CUNA Requests PCA, MBL Updates in Reg Relief

WASHINGTON-CUNA President and CEO Dan Mica has written Senate Banking Committee Chairman Richard Shelby (R-Ala.) asking that two important provisions be included in any regulatory relief legislation that comes out of the committee. Additional flexibility in business lending is one of those items. Mica asked that the legislation include provisions to increase the cap from 12.25% of assets to 20% and increase the amount of loans excluded from the definition of a business loan from $50,000 to $100,000. He cited a report from the Small Business Administration that found a strong need for more small business lending. Referring to the plethora of bank mergers, Mica wrote, “This report found that as financial institutions increased their size through mergers, they did less small business lending. Easing credit union member business lending restrictions would therefore help to fill this vacuum.” CUNA also expressed support for inclusion of NCUA’s Prompt Corrective Action reform proposal, which would “ensure that the standards are “aptly robust” and “not unduly burdensome or constraining,” and to allow the NCUA to develop a more vigorous and modern risk-based capital regime for credit unions.” The letter continued, “CUNA supports making changes that are similar to the capital standards now applicable to FDIC-insured institutions. This system involves complimentary leverage and risk-based standards working in tandem. This would revise thresholds for PCA net worth categories for credit unions to new net worth ratio thresholds that are comparable to those used by the FDIC for the leverage requirements. The risk-based net worth ratio thresholds are also based on the comparable FDIC total risk-based capital requirements and the international Basel II standards. “I believe that enacting the NCUA capital reform proposal would ultimately result in capital and net worth requirements that more precisely reflect a credit union’s actual risk profile, while providing appropriate safeguards for the National Credit Union Share Insurance Fund, the American taxpayer, and the overall credit union system.”