NAFCU statement on NCUA’s second proposal on risk-based capital

WASHINGTON, DC (January 15, 2015) — National Association of Federal Credit Unions (NAFCU) President and CEO Dan Berger issued the following statement in response to the National Credit Union Administration (NCUA) Board’s release of its second risk-based capital proposal.
“We thank the NCUA Board for its leadership and NCUA’s staff for their hard work on the agency’s second risk-based capital proposal. We appreciate the agency addressing several of the key concerns, including the risk weighting and implementation period issues raised by NAFCU, credit unions and lawmakers,” said Berger. “However, we believe this rulemaking is unnecessary.
The costs associated with it are shocking given how extremely well-capitalized the industry is today. The huge costs of this proposal, which attempts to address just a few dozen credit unions, reinforces our position that this rule is not necessary and, quite frankly, was never necessary.”
“We believe that risk in credit union operations can be addressed on a case-by-case basis. NAFCU is commencing a detailed review of this proposed rule, and we will work with our members to provide NCUA detailed feedback. Any final risk-based capital rule must leave credit unions the ability and flexibility they need to serve their members and thrive.”
“NAFCU will continue to do whatever it takes, both at the regulatory agency and on the Hill, to ensure that a fair, risk-based capital system is established for credit unions.”

Today’s proposal addresses several elements that were sought by NAFCU including:

  • The individual minimum capital requirement has been removed; NCUA says it will rely on other supervisory authorities to address deficiencies in capital levels.
  • NAFCU also urged a lengthy implementation period. Under today’s draft rule, the new requirements would take effect Jan. 1, 2019. This is more than twice the amount of implementation time provided in last year’s proposal.

Some elements of last year’s risk-based proposal that remain in this proposal are the two separate classifications for “well-capitalized” and “adequately capitalized” credit unions, and concentration risk is unchanged.

In December, Berger wrote NCUA Chairman Debbie Matz to reiterate NAFCU’s concerns with the first proposal and urge the agency to make major modifications in the second proposal. He also said that any capital reform must include access to supplemental capital for all credit unions.
The National Association of Federal Credit Unions is the only national trade association that exclusively represents the interests of federally chartered credit unions before the federal government and the public.

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