Johnson, Crapo lodge RBC concerns with NCUA

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Sens. Tim Johnson, Mike Crapo are concerned about how NCUA's proposed capital rule would affect credit union lending.

June 5, 2014 – Senate Banking Committee Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho, wrote NCUA Board Chairman Debbie Matz Wednesday airing concerns about the impact of the agency’s proposed risk-based capital rule on credit unions and their ability to expand lending.

The two senators, both of whom have large constituencies in agriculture, said they were particularly concerned about how the proposal would require many credit unions to add capital in order to maintain their capital cushions – the portion of capital maintained above the regulatory requirement for a classification of “well capitalized.” "This practice was viewed by many, including NCUA examiners, as a prudent and responsible way to plan for risk," they wrote.

Both senators are especially concerned about how the proposal's risk weightings would affect credit unions’ agricultural lending.

NAFCU President and CEO Dan Berger said the letter should give NCUA pause. “We appreciate Chairman Johnson’s and Ranking Member Crapo’s leadership and support on this critical issue,” said Berger. “The potentially devastating impact of the risk-based capital rule cannot be overestimated. We hope NCUA will heed the avalanche of concerns raised both in the industry and on the Hill should they decide to move forward.”

Three weeks ago, 324 House members signed on to a letter detailing their concerns about the proposal with Matz. So far, the agency has reported processing more than 2,000 comment letters on the proposal.

Related Links:
Johnson-Crapo letter to Matz
Capital reform