Lively back and forth defines RBC listening session

It was a lively back and forth at Thursday’s National Credit Union Administration Listening Session here, with credit union participants enumerating their concerns with the regulator’s risk-based capital (RBC) plan and the agency responding with thoughts about possible changes to the proposal.

In fact, by about midway through the session NCUA Chair Debbie Matz made it clear that “everything is on the table” regarding possible changes to the RBC plan proposed in January.  While she said the agency is not required to put a revised version of the proposal out for a separate comment period–beyond the one that concluded May 28–she also said very clearly that there is “no rush” to the finish line on this rule.

Matz told the session that the risk-based plan for natural-person credit unions started 2 1/2 years ago when the NCUA was working out the problems of the corporate credit unions during the country’s mortgage market meltdown. She said the NCUA became frustrated that some credit unions had greater risk than their capital covered.

She said the agency will assess all comments and come up with a better rule, but found it hard to justify not having a risk-based capital RBC rule.

During the session, NCUA Director of Examination and Insurance Larry Fazio emphasized that the agency’s intention is not to ask the credit union system to hold more capital, but to ask “outliers” to hold more capital. NCUA Chief Economist John Worth, responding to a credit union concern that the plan, as written, will seriously impact long-term growth in a negative way, said the agency is looking at long-term impact and will integrate those considerations into the “next round.”

Credit Union National Association Deputy General Counsel Mary Dunn, attending the Los Angeles session, said the credit union interaction with regulators seemed productive. “Chairman Matz and her staff could not have been clearer that they intend to roll up their sleeves on this proposal and make changes.

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