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NAFCU President and CEO Dan Berger reiterated the association's position on risk-based capital in a letter to NCUA Board Chairman Debbie Matz, urging that the board include major modifications to several key areas when it issues its second proposal.

Matz has announced that she would like to see a second RBC proposal at the Jan. 15 open board meeting.

"NAFCU and our member credit unions believe it is critical that NCUA effectively consider and incorporate industry input to ensure that an appropriate risk-based capital regime is adopted for the credit union industry," Berger wrote Wednesday. "The 2,000 comments submitted for the first proposal clearly demonstrate that credit unions around the country have a vested interested in this issue, and the concerns they raised deserve consideration."

Berger listed NAFCU's and its members' concerns about the RBC proposal, including the following:

• several issues related to NCUA's legal authority to issue the rule as first proposed, such as comparability with banking regulatory requirements, individual capital requirements and definition of a "complex" credit union;
• the proposed, 10.5 percent risk-based capital ratio set under the proposal for "well-capitalized" credit unions;
• NCUA's treatment of risk-weighted assets and the lack of explanation for deviation from similar banking risk-weights;
• NCUA's incorporation of interest rate and concentration risk into risk-weighting for real estate, investments, and member business loans; and
• issues related to the proposed individual minimum capital requirements and the subjectivity of their imposition.

Berger said NAFCU supports a risk-based capital system that reflects lower capital requirements for lower-risk credit unions and higher capital requirements for higher-risk credit unions. However, he said the association is still pushing Congress to make changes to the Federal Credit Union Act "to achieve a fair system."

He added that capital reform must include access to supplemental capital for all credit unions.

Berger thanked Matz for her commitment to making significant changes to the first proposed rule and for allowing a second comment period. He also urged Matz and the board to again establish an RBC working group to gather input from credit unions and industry representatives on the second proposal.