Continuing a long battle between House Republicans and the NCUA, the House Financial Services Committee on Wednesday approved legislation to kill the agency's risk-based capital rule.
The panel approved the measure 33-25; it now goes to the House floor.
The bill, sponsored by Rep. Bill Posey (R-Fla.) is the latest shot in the battle between committee Republicans and the agency over the risk-based capital rule.
The NCUA board began updating its RBC rule after other federal banking agencies updated their rules.
As the agency—then controlled by Democrats—prepared to issue its final rules in 2015, Financial Services Chairman Jeb Hensarling (R-Texas) sought a delay, saying that the issue needed further study.
"It is deeply troubling that you would utterly disregard the express will of this committee and rush to adopt a misguided rule that risks undermining the safety and soundness of credit unions in a contravention of the NCUA's statutory mandate," Hensarling wrote in his letter.
The board adopted the rule anyway; it goes into effect on Jan. 1, 2019.
In adopting the rule, the NCUA board said that "the overarching intent of the final rule is to reduce the likelihood of a relatively small number of high-risk outliers exhausting their capital and causing systemic losses."
But the bill—adopted Wednesday—would kill the rule—a move that was welcomed by credit union trade groups.
"Credit unions are concerned with NCUA's legal authority to implement such standards and the substantial regulatory burdens and additional cost they impose," NCUA President/CEO Jim Nussle said in a letter to the House committee.
"If the RBC rule is allowed to take effect as written, more than 400 credit unions would see a decline in their capital cushions," NAFCU President/CEO B. Dan Berger said following the committee vote.
NCUA Board Chairman J. Mark McWatters—a former counsel to Hensarling—has said he is willing to re-examine the RBC issue. McWatters has previously said, "I am of the view that NCUA does not possess the legal authority under the FCUA to adopt a two-tier RBNW regulatory standard."
However, Board Member Rick Metsger said last week that the potential problems posed by credit unions that made taxi medallion loans demonstrates the need for the rules.
During the markup, the committee also approved legislation that would establish an independent examination appeals process at the Federal Financial Institutions Examination Council.
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