NAFCU is pressing the NCUA board to lower the credit union leverage ratio, following lawmakers’ decision to lower it for community banks in the coronavirus stimulus bill awaiting House passage.
“The NCUA should also seek to maintain parity with regulatory efforts to ease leverage and liquidity requirements for banks during the present emergency,” NAFCU President/CEO B. Dan Berger wrote in a letter to NCUA Chairman Rodney Hood on Thursday. “The NCUA must act quickly to implement capital relief for credit unions that is, at the very least, equivalent to what is being offered to banks during this time of crisis.”
Berger’s letter came as credit union trade groups sought additional guidance and from regulators.
For instance, the NCUA and other regulators said they will be flexible with institutions filing late Call Reports.
“The federal banking agencies will not take action against any institution for submitting its March 31, 2020, Reports of Condition and Income (Call Reports) after the respective filing deadline, as long as the report is submitted within 30 days of the official filing date,” the agencies, including the NCUA said.
But more is needed, the trade groups said.
Under the stimulus bill, federal banking regulators would be required to temporarily lower the Community Bank Leverage Ratio from 9% to 8%. The provision would expire when the national emergency ends or by the end of the year.
The New York Times hailed that provision as a win for community bank lobbyists.
A financial services source told CU Times that credit unions had sought a similar provision but lost.
“According to [Banking] Committee staff, at no point did the credit union requests gain traction, despite multiple attempts since last weekend,” the source said.
CUNA Chief Advocacy Officer Ryan Donovan said the decision was not a loss for credit unions.
“Credit unions and banks operate with different capital standards in large part because what counts as capital for purposes of prompt corrective action is different,” he said.
He continued, “We did explore giving NCUA some flexibility to adjust the credit union leverage ratio; we provided some language to that effect to the Banking Committee.”
He said that in the end, the decision was made to keep the credit union leverage ratio “in large part because credit unions enter this crisis extraordinarily well capitalized, and because credit unions leverage ratio requirements are still lower than community bank leverage ratio requirements.”
Credit unions do not need Congress to adjust the leverage ratio, Carrie Hunt, NAFCU’s EVP of government relations and general counsel, said.
“NCUA does have the ability to give credit unions parity,” she said. “The NCUA can do this.”
Credit unions are citing other problems the coronavirus is causing them.
A group of banking and credit union trade groups has asked the Financial Crimes Enforcement Network for a 90-day extension for the filing of Bank Secrecy Act reports, particularly Currency Transaction Reports.
“Many bank and credit union compliance officials are following public health guidelines by working from home and do not have access to the FinCEN reporting portal,” the groups, including CUNA and NAFCU, said in a letter.
Several trade groups, including CUNA and NAFCU, also are asking the Small Business Administration for guidance on how the agency will administer the loan program created by the stimulus bill.