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July 17, 2014 – NAFCU President and CEO Dan Berger yesterday sent Rep. Ed Royce, R-Calif., proposed legislative language that would require NCUA to review its risk-based capital proposal further and report back to Congress before finalizing it.

This "stop and study" approach to the proposed rule was urged by NAFCU witness David Clendaniel, president and CEO of Dover Federal Credit Union, during a hearing Tuesday in the House Financial Services Subcommittee on Financial Institutions and Consumer Credit. At the close of Q&A, Royce invited a full proposal.

Berger, in last night's response, said the "stop and study" approach "would help ensure that the agency, credit unions, Congress and others fully understand and comprehend the impacts of this proposal before moving forward." He said the added time provided by the study could help ensure any final rule is "done right."

NAFCU's proposed study would include:

• analysis of appropriate risk weights;
• justification and clarification of why the proposal's risk weights differ from those applied for community banks;
• determination of actual risk attributable to assets held by credit unions;
• analysis and review of the cost and burden of new risk-based net worth requirements beyond the current leverage ratio requirements;
• historical success or failure of credit unions relative to capital levels, particularly during the financial crisis;
• analysis of the NCUA proposal's impact on mortgage, auto, business and other lending by credit unions; and
• an examination of secondary capital for credit unions.

NCUA would have one year following enactment of the study requirement to report findings to Congress. A final rule could not be issued for another 18 months and would have to provide at least a 36-month implementation period.