Congress grills NCUA on risk-based capital
April 9, 2014 – Rep. Ed Royce, R-Calif., during a hearing Tuesday questioned NCUA
General Counsel Michael McKenna on the agency’s proposed risk-based capital rule, echoing NAFCU’s concern that the proposal’s risk weights
are not accurate reflections of risk.
McKenna was testifying
along with representatives from CFPB, the Federal Reserve Board, the
FDIC and the Office of the Comptroller of the Currency during a House
Financial Services Committee hearing titled “Who’s in Your Wallet:
Examining How Washington Red Tape Impairs Economic Freedom.”
questioning McKenna, Royce asked why the proposal’s risk weights are
higher than those used by the FDIC when the delinquency rate at credit
unions is lower than at banks.
McKenna responded that the rule
is still in the proposal stage. He said NCUA has received comments on
the risk-weights issue and will consider those in drafting the final
rule. He also said the agency believes the risk weights are
equivalent to those used by the FDIC given the unique nature of credit
unions and other factors.
Rep. Brad Sherman, D-Calif., also
questioned McKenna and said he thinks the proposed rule is tougher on
credit unions than Basel III (a regulatory standard for banks) is on
Sherman also said credit unions should have
access to supplemental capital and asked why NCUA hasn't addressed
supplemental capital in its proposal. McKenna indicated that the agency
may take a look at supplemental capital as the rule progresses.
Also during the hearing, Royce asked McKenna about H.R. 4226, the “Credit Union Residential Loan Parity Act,”
which Royce introduced with Rep. Jared Huffman, D-Calif., to exempt certain residential loans from credit unions' federal statutory cap on member business loans. McKenna
said NCUA has no concerns about the bill from a safety
and soundness perspective.
April 10 webcast on risk-based capital proposal
"Berger: NCUA can do more to reduce reg burden," 4/9/14
"Few in survey see capital proposal as sensible," 4/9/14
"NAFCU cites NCUA capital proposal, CFPB rules in call for relief," 4/8/14