MONTREAL – The NCUA’s proposals on risk based capital haveraised concerns among credit unions, trade associations and evenmembers of Congress. Earlier this month, the Congressional bill H.R. 2769 was introduced (informallyknown as the “stop and study bill”), which directs the NCUA toreevaluate its proposed RBC rule and justify its merits, as well asexplain the agency’s authority to impose this directive on thecredit unions it regulates.

CUNA and NAFCU agree that the RBC rule, both in its currentiteration and the revised version that has fallen underCongressional scrutiny (RBC2), still raises significant concern forcredit unions. However, while NAFCU strongly supports the stop and study bill, calling it a crucialelement of giving RBC2 the scrutiny it deserves, CUNA President/CEOJim Nussle deemed it remote, according to the contents of aconfidential email from CUNA President/CEO Jim Nussle to leagueexecutives obtained by CU Times.

“When the RBC2 proposal was issued earlier this year, we gave alot of consideration to pursuing a legislative strategyandconcluded that the second round of the rulemaking was not thebest time to engage Congress,” Nussle wrote in the June 18 email.“We concluded at that time that the challenges facing legislationwith broad Congressional support are significant, making theprospect of enacting a bill like this remote, particularly beforethe rule is final.”

From a strategic perspective, Nussle continued, a legislativeeffort like a stop and study bill seemed unlikely to positivelyimpact the final rule and may impede progress CUNA has been makingon other matters. CUNA instead urged credit unions to continueto comment on the issue while the trade group sought to engage theagency in ongoing discussions about the proposed rule.

“We considered once again how a legislative strategy at thistime might impact the rule, and came away with largely the sameconclusion: It’s not likely to have a positive impact on the finaloutcome,” Nussle’s email said. “Further, it would likelydistract from our efforts on 1-4, CFPB reform, data security, NCUAbudget transparency, privacy notification and other issues thathave a chance for real progress during this Congress.”

Nussle also questioned the cost involved in having NCUAre-evaluate its own RBC rule with the thought that the agency mightarrive at a different conclusion.

RBC2 and the stop and study rule also sparked some chatter amongattendees at NAFCU’s Annual Conference in Montreal, some of whomvoiced their firm opposition to RBC2 and uncertainty as to whetherH.R. 2769 will have any effect at all.

“They [the NCUA] had no business getting it out,” DanielMaynard, CFO/treasurer for the $69 million Crossroads CommunityCredit Union in Cheektowaga, N.Y., asserted in regard to the RBCrule. “They are overstepping their powers, and it really has nobenefit to any credit union. The NCUA’s budget is growing, andthey’re just getting too big, right along with the CFPB.”

When asked about his opinion on H.R. 2769, Maynard said hedoubts it will help take RBC2 off the table because the NCUA haslikely already formed its opinion on risk-based capital.

“It’s amazing that Congress was able to do that [introduce thebill],” Maynard said. “I hope it does some good, but I’m notoptimistic.”

Stanley Chapman, board chair for the $1.1 billion, San Jose,Calif.-based Meriwest Credit Union – who has served the creditunion for 48 years – said Meriwest CU has been very vocal about itsopposition to RBC2 and has stood in line with NAFCU’s stance on theissue since day one.

“It’s a bit of an overkill,” Chapman said. “Right now we’restill recovering from a recession, and the NCUA is being a bitoverbearing. They appear to be using the lowest common denominatorsin determining their supervision criteria.”

Guy Petroro, senior vice president and chief lending officer forthe Miami Lakes, Fl.-based, $172 million Jetstream Federal CreditUnion, said while his experience isn’t heavy in credit unionfinancials, he still opposes RBC2 for the industry as a whole.

“When it comes to analyzing your financials, the NCUA isbecoming more stringent,” he said. “This could really hurt a lot ofcredit unions.”

Read more about RBC2 and H.R. 2769 in the July 1, 2015 issueof CU Times.