NAFCU Letter to NCUA for Support for Rep. Miller’s “Regulatory Relief for Credit Unions Act of 2013”

June 28, 2013

The Honorable Debbie Matz, Chairman

The Honorable Michael Fryzel, Board Member

National Credit Union Administration

1775 Duke Street

Alexandria, VA 22314

RE:  Regulatory Relief for Credit Unions Act of 2013

Dear Chairman Matz and Board Member Fryzel:

On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association that exclusively represents the interests of our nation’s federal credit unions, I write today to ask for your support for legislation that would provide significant regulatory relief to America’s credit unions and modernize the regulatory capital regime under which they operate.  Earlier today, the “Regulatory Relief for Credit Unions Act of 2013” (H.R. 2572) was introduced by Representative Gary Miller (R-CA). The bill would provide credit unions much needed regulatory relief.

H.R. 2572 contains a number of key provisions, including provisions that would fundamentally change regulatory capital requirements for credit unions by adopting a risk-based capital system. A regulatory capital system that takes into account the risks of assets, rather than one which does not, will provide a more accurate measurement of a credit union’s risk profile and safety and soundness. As you know, this is not a novel concept for most other financial institutions; unfortunately, however, credit unions have been required to function under an outdated, inflexible and generally unhelpful system that fails to adequately differentiate risks associated with different assets. As a result, credit unions’ ability to meet their members’ needs is unnecessarily limited.

The proposed legislation directs the National Credit Union Administration (NCUA) to design a risk-based capital regime for credit unions that takes into account material risks. The bill amends current net worth categories to reflect risk-based net worth ratios and raises each category’s threshold. It also gives the Board discretion to determine whether a credit union is well capitalized by an alternative standard. A risk-based capital approach would create regulatory consistency between credit unions and other financial institutions.

In addition to capital, H.R. 2572 would also grant federally-chartered credit unions parity with their state-chartered credit union counterparts in terms of some of their powers. This is necessary, as evidenced by the increasing number of charter conversions due to the overly restrictive statutory and regulatory limitations imposed on federally-chartered credit unions.  NAFCU believes the federal charter needs to be updated and modernized to remain competitive and ensure adequate charter diversity.

Further, the legislation would authorize the NCUA to modify a regulation promulgated by the Consumer Financial Protection Bureau (CFPB) where necessary. It would also grant credit unions more control over their investment decisions and portfolio risk. Finally, it would provide credit unions parity with banks in terms of deposit insurance coverage of Interest on Lawyers Trust Accounts.

The NCUA has previously supported a risk-based capital regime for credit unions, as well as other changes contained in H.R. 2572. NAFCU calls on the NCUA to once again extend support to risk based capital for credit unions and the other changes contained in the legislation.

Should you have any questions, please feel free to contact me by telephone at (703) 842-2215 or by email at, or Dan Berger, NAFCU’s Executive Vice-President for Government Affairs, at (703) 842-2203 or


Fred R. Becker, Jr.

President and CEO

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