Watts asks NCUA for balanced approach in RBC comment letter — 5/23/14

With a May 28 deadline approaching, League President Ken Watts weighed in on the NCUA’s Rick Based Capital Proposal put out for comment earlier this spring. Watts’ May 19 letter called on the National Credit Union Administration to “re-draft” and “re-issue” the proposal for a longer comment period.

CUNA has characterized the proposed rule as one of the most important regulatory proposals NCUA has released in many years.

“By doing so, and by taking into account the multitude of comments on this issue, it will allow for a much more balanced approach to the proper capital component for credit unions,” Watts emphasized.

If adopted, credit unions with assets greater than $50 million would need to increase the amount of capital held in order to be well capitalized, and could face burdensome risk weightings that would serve as a disincentive for member business and mortgage loans, and long-term investments. CUNA’s calculations project that up to $7.3 billion in additional capital would need to be held. These changes are being proposed after the existing capital rules allowed credit unions to survive the greatest economic disaster since the great depression.

The League has asked credit unions with assets exceeding $40 million in assets to write a comment letter to the NCUA prior to the deadline via the RBC resource center that CUNA has set-up through their web page via log-in.

Outgoing NCUA Board member Michael Fryzel has stated in a letter to CUNA President Bill Cheney that he feels “It is important for the NCUA board to take whatever time is necessary to hear the comments of everyone impacted by the rule, and review all comments and suggestions to make the rule more precise and useful as a supervisory as well as a safety and soundness tool for both the credit union industry and the NCUA.”

To date, over 1,000 letters have been submitted by credit union representatives, Leagues, and vendors.