Berger to NCUA: Grant CUs urgent capital flexibility, bank parity

NAFCU President and CEO Dan Berger Wednesday urged the NCUA to grant credit unions “additional capital flexibility to address the economic crisis” and provide parity with banks in light of the coronavirus outbreak.

Berger specifically asked the agency to provide capital relief that is equivalent to what is being offered to banks by the federal banking agencies and Congress, citing the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which reduces the community bank leverage ratio (CBLR) from 9 to 8 percent.

“Community banks that use the CBLR framework and maintain this new leverage ratio would be considered to have satisfied the risk-based and leverage capital requirements in the banking agencies’ generally applicable capital rule,” noted Berger.

Berger also suggested the NCUA “seek to maintain parity with regulatory efforts to ease leverage and liquidity requirements for banks,” highlighting that the current crisis may lead to a temporary deterioration in net worth ratios at some credit unions.

 

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