April 18, 2014 – NCUA yesterday released a video seeking to clarify its proposed rule on risk-based capital – an effort NAFCU believes supports the argument for giving credit unions more time to review and provide input on this critical measure.
The comment period on the capital proposal is set to expire May 28; yesterday, NAFCU and CUNA jointly wrote the agency board to again seek an additional 90 days for credit unions to submit their input.
Carrie Hunt, NAFCU’s senior vice president of government affairs and general counsel, said “it is clear” that the agency has failed to provide sufficient time for comments. She said if NCUA really wants a fair, reasonable rule, “there is no reason not to give credit unions more time to comment.”
In the first part of NCUA’s two-part video, agency Board Chairman Debbie Matz discusses the importance of feedback and comment letters on the proposal. She reiterated the agency’s estimate that about 200 credit unions would be required to hold more capital.
NCUA’s proposal would affect credit unions with $50 million or more in assets. NAFCU’s own analysis shows these institutions would have to hold another $6.7 billion in reserves to maintain their current capital cushion.
The association has warned that this one-size-fits-all proposal would require all credit unions subject to the proposed rule, not just the 3 percent that would be downgraded under it, to adjust capital.
NAFCU has raised specific concerns about the proposed rule’s risk weights, individual minimum capital requirement and implementation period for the rule. Lawmakers are concerned about the proposal as well.