Industry-wide concern over NCUA’s RBC rule prompts April webinar
WASHINGTON, DC (April 18, 2014) — A panel of industry experts will lead a webinar on NCUA’s proposed Risk-Based Capital Rule, the potential game-changing regulation currently facing credit unions. The event, offered at no charge, is April 23, from 2-3 p.m. Eastern Time.
Titled “Everything You Need to Know About NCUA’s Proposed Risk-Based Capital Rule to Prepare a Response,” the session will be led by Doug Alldredge, CFO from First Credit Union in Chandler, Ariz.; Jim Vilker, NCCO, VP from CU*Answers and former NCUA examiner; and Andrew Bolton, Senior Industry Analyst from Callahan and Associates The session will be moderated by Chip Filson, Founder of Co-Ops for Change and former NCUA Director of the Office of Examination & Insurance, who also will give a presentation.
In response to concerns expressed by many credit unions, the webinar’s panelists will share their views of the proposal, discussing how RBC could affect the role of directors, drive business plans for management and reduce member returns.
According to Jim Vilker, what is causing angst among credit unions is the stipulations that allow an examiner to arbitrarily override RBC’s rule weights for minimum risk-based ratios and impose their own subjective judgments.
“Credit unions that at the beginning of the exam are considered well-capitalized could, by the end of the exam, be immediately placed into a prompt corrective action (PCA) category,” he said.
Doug Fecher, CEO of Wright Patt Credit Union in Fairborn, Ohio, says of the proposal that “America’s cooperative credit unions, and the members they serve, do not stand to benefit from this rule in any meaningful way.”
Further, he says “America’s credit unions – since their inception – have been the model of risk management in the U.S. financial system. No other class of financial institution has been as resilient to risk as credit unions. Lack of a profit motive, a mission of service, cooperative ownership, and more, are all reasons for this performance. That fewer credit unions have failed than any other type of financial institution is no accident.
Chip Filson noted that, given the potential for far-reaching unintended impacts, it is critical for credit unions to understand the ramifications.
“This is the most comprehensive and intrusive regulation ever proposed for credit unions. It’s critical that they understand how it will affect them and their members,” said Filson. “What we are hearing from numerous credit unions – a position echoed by many economic and financial experts – is that nothing meaningful or beneficial will come from RBC.”
The session will include discussion on why it is important and officials to submit comments to NCUA about how the regulation could affect their operations. There also will be a brief demonstration of a model designed to help analyze the RBC rule’s impact on individual credit unions.
“This proposal is based on the idea that capital adequacy for thousands of separate credit unions can be determined through a national formula. And if the formula doesn’t work, NCUA examiners would determine a credit union’s capital level,” said Filson. “This would significantly
diminish the responsibility of boards and management to make critical financial judgments, determine strategic direction union, and oversee policy.”
The complimentary webinar is open to the public. For more information and registration details, visit http://www.creditunions.com/events.
About Co-Ops for Change
Co-Ops for Change is a grassroots movement to increase awareness both within the credit union community and among elected policymakers that our regulatory leadership should understand and support the seven cooperative principles. The regulatory process should consider credit unions’ cooperative character, as well as the shared economic value they create for people and communities. Credit union members, volunteers, professionals and industry supporters can learn more about the campaign at www.Coops4Change.org.