WASHINGTON — While NCUA has worked for a few years now to bring the Treasury Department around to its way of thinking on a risk-based capital framework, progress has been made, but its work is not through.

During remarks to NAFCU's Congressional Caucus, Treasury Assistant Secretary Emil Henry explained, "One common thread in capital requirements across types of financial institutions is that either the leverage or the risk-based requirement is the binding constraint. While the leverage requirement is currently the binding constraint for most credit unions, this is also the case for other insured depository institutions that have a relatively low-risk portfolio of assets."

He continued, "The general rationale for imposing a higher minimum leverage capital requirement on credit unions is that, unlike many other insured depository institutions, credit unions can generally only build capital through increases in retained earnings. Other factors that have been cited for imposing a higher leverage capital requirement surround the proper accounting for credit unions' investment in the NCUSIF and their investments in corporate credit unions." Given these and other differences from for-profit financial service providers and the capital-building goals of PCA, "this argues for somewhat differing capital requirements between credit unions and other institutions," Henry said. He encouraged continued dialogue. Something credit unions may be closer to achieving is regulatory relief legislation, he noted. "It is my hope that we can move America's financial services sector forward and leave unnecessary regulatory burdens in the past," Henry said. Additionally, he applauded credit union efforts on the financial literacy front. "The Treasury's Office of Financial Education has always found the credit union community to be a willing and able partner in spreading financial literacy across the country," Henry said. "We have honored many credit unions for their work, and have collaborated with many others. Earlier this year, along with 19 other agencies, we released the first ever National Strategy for Financial Literacy and you will be pleased to know that credit unions were well represented in that document." –[email protected]