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.”

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