Members of Congress reintroduce NAFCU-backed ‘Stop and Study’ bill on risk-based capital
WASHINGTON, DC (September 12, 2017) — National Association of Federally-Insured Credit Unions (NAFCU) Vice President of Legislative Affairs Brad Thaler today thanked Reps. Bill Posey, R-Fla., and Denny Heck, D-Wash., for reintroducing a NAFCU-sought, bipartisan bill that would require the NCUA to conduct a study on the appropriate capital requirements for credit unions before implementing its final risk-based capital (RBC) rule, which is scheduled to take effect Jan. 1, 2019.
The bill, titled the Risk-Based Capital Study Act of 2017 (H.R. 3736), would also require the NCUA to submit its study on the rule to Congress, along with legislative recommendations to improve the credit union capital system.
“NAFCU thanks Reps. Posey and Heck for reintroducing this important legislation that would help ensure that the NCUA, credit unions, Congress and others fully understand and comprehend the impacts this rulemaking will have on the industry,” said NAFCU Vice President of Legislative Affairs Brad Thaler. “Requiring further study of this rule will only benefit the credit union industry and ensure a fair and appropriate risk-based capital system is put into place.”
Over the past three years, NAFCU has consistently opposed the NCUA’s RBC rulemaking and urged its withdrawal because of the adverse effects it would have on the credit union industry – particularly as a result of regulatory burdens and costs. NCUA Chairman J. Mark McWatters has indicated that revisiting this rulemaking is on his list of priorities for this year.
The Risk-Based Capital Study Act of 2017 (H.R. 3736) would require the NCUA to study and report to Congress within nine months on:
- whether the agency has the clear and legal authority to issue a two-tier proposal;
- how RBC compares to bank capital requirements;
- the rationale behind the risk weighting used by the agency; and
- the impact the rule will have on credit unions’ capital cushions.
If the bill is passed, the agency would not be able to implement the RBC rule until 120 days after the report goes to Congress.
While the final rule includes significant NAFCU-advocated changes from its original proposal, concerns about the rule’s effectiveness remain.
NAFCU believes legislative changes are necessary to bring about comprehensive capital reform for credit unions, such as allowing credit unions to have access to supplemental capital sources and making statutory changes needed to design a true risk-based capital system for credit unions.
The National Association of Federally-Insured Credit Unions is the only national trade association focusing exclusively on federal issues affecting the nation’s federally-insured credit unions. NAFCU membership is direct and provides credit unions with the best in federal advocacy, education and compliance assistance. For more information on NAFCU, go to www.nafcu.org or @NAFCU on Twitter.