March 12, 2013 – NAFCU Vice President of Legislative Affairs Brad Thaler on Monday called anew on House leaders to support a NAFCU-backed bill aimed at enhancing credit unions’ ability to react to market conditions in the wake of a bankers’ attack that mischaracterized the legislation.
Writing to House Speaker John Boehner, R-Ohio, and Minority Leader Nancy Pelosi, D-Calif., Thaler noted that H.R. 719, the “Capital Access for Small Businesses and Jobs Act,” is “an important bill for credit unions, small businesses and job creation.” The bill, introduced by Reps. Peter King, R-N.Y., and Brad Sherman, D-Calif., would allow credit unions to hold non-share forms of supplemental capital that do not alter the institutions’ cooperative nature, he said.
Earlier on Monday, a letter from a bank trade group to House representatives attacking H.R. 719 got “many things wrong,” Thaler said, including the bill’s title. The bankers claim that the bill would undermine the cooperative character of credit unions. This is incorrect, Thaler said, noting that the explicit language of the bill states that any rules promulgated by the NCUA must “not alter the cooperative nature of the credit union.”
Thaler also pointed out that a credit union’s net worth ratio is determined solely on the basis of retained earnings as a percentage of total assets under current rules. “Because retained earnings often cannot keep pace with asset growth, otherwise healthy growth can dilute a credit union’s regulatory capital ratio and trigger nondiscretionary supervisory actions under prompt corrective action rules,” he said. “H.R. 719, removes this artificial constraint by empowering the NCUA to authorize qualified credit unions access to supplemental capital.”
Thaler added that the objective of H.R. 719 “is to ensure credit unions can continue to accept new deposits, especially during tough economic times, when demand for loans and other income-generating services are low, and to provide the NCUA with the same authority and flexibility to adjust capital requirements in response to changes in economic conditions as Congress has provided to federal banking regulators.”
Capital reform is one of the key objectives outlined in NAFCU’s
five-point plan for regulatory relief. The plan also seeks enhanced administrative powers for NCUA, structural improvements for credit unions, operational improvements for credit unions and data security reforms.