CUNA letter to House Financial Services Committee on Risk-Based Capital Study Act

WASHINGTON, DC (September 22, 2015) — Today CUNA sent a letter to the House Financial Services Committee to encourage the committee to consider H.R. 2769, the Risk-Based Capital Study Act.

“We’ve heard from our members on the very significant concerns they have regarding NCUA’s revised proposal to update risk-based capital standards for credit unions,” said Ryan Donovan, chief advocacy officer for CUNA. “As we move closer to a final proposal, we have growing concerns that NCUA is not making as significant changes as we had hoped. We strongly believe that NCUA’s proposal must be consistent with the law and seek to minimize additional regulatory burden on credit unions.”

CUNA’s full letter is below:

September 22, 2015

The Honorable Jeb Hensarling
Committee on Financial Services
United State House of Representatives
Washington, DC 20515

The Honorable Maxine Waters
Ranking Member
Committee on Financial Services
United States House of Representatives
Washington, DC 20515

Dear Chairman Hensarling and Ranking Member Waters:

On behalf of the Credit Union National Association (CUNA), I am writing in support and to encourage your committee’s consideration of H.R. 2769, the Risk-Based Capital Study Act.  CUNA is the largest credit union advocacy organization in the United States, representing America’s state and federally chartered credit unions and their more than 100 million members.

The Risk-Based Capital Study Act, introduced by Representatives Fincher (R-TN), Heck (D-WA), and Posey (R-FL), responds to the very significant concern many credit unions have regarding the National Credit Union Administration’s revised proposal to update risk-based capital standards for credit unions.  The comment periods for NCUA’s two risk-based capital proposals generated a very significant response from stakeholders, with hundreds of credit unions expressing doubts related to NCUA’s legal authority to impose the requirements it has proposed.

Of particular concern is NCUA’s proposal to set a risk-based capital standard for the purpose of determining whether a credit union is well-capitalized.  As we discussed with the Committee previously, and as former Senate Banking Committee Chairman Alfonse D’Amato stated eloquently in his comment letter, the Federal Credit Union Act permits the NCUA to impose a risk-based standard for the purpose of determining capital adequacy only.  He wrote:

“[W]hen we included in the law the language: ‘The Board shall design the risk-based net worth requirement to take account for any material risk against [which] the net worth ratio required for an insured credit union to be adequately capitalized may not provide adequate protection,’ we meant just that, adequately capitalized. If we had intended there should also be a separate risk-based requirement to be well capitalized (in addition to the 7% net worth ratio), we would have said so.”

Credit unions also have significant concern with the additional regulatory burden this proposal would cause, and they question whether the cost of the proposal is justified.  Our analysis of the proposed rule shows that it would have done very little to reduce costs to the National Credit Union Share Insurance Fund (NCUSIF) had it been in effect during the most recent financial crisis. The current Prompt Corrective Action (PC) system served very well during that crisis, with relatively few credit union failures.  If a goal of a Prompt Corrective Action scheme is for covered institutions to hold sufficient capital to withstand a severe financial crisis without imperiling the deposit insurance fund, the results of the lab test that was the recent financial crisis are compelling evidence that a major overhaul of current credit union capital requirements toward a Basel-style system is simply not required.

The Fincher-Heck-Posey bill would delay implementation of the risk-based capital proposal pending an NCUA study on the impact the proposal would have on credit unions.  More than 370 members of Congress have expressed concern regarding this proposal; we believe Committee action on this legislation would send another very significant signal to NCUA that its proposal must be consistent with the law and seek to minimize additional regulatory burden on credit unions.

NCUA’s proposal continues to be a solution in search of a problem.  We urge the Committee to consider and approve the Fincher-Heck-Posey bill.

On behalf of America’s more than 100 million credit union members, thank you for your consideration.


Jim Nussle
President & CEO

About CUNA

Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 135 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit To find your nearest credit union, visit


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