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FOR IMMEDIATE RELEASE

NAFCU: NCUA Response to Rep. King and Rep. Meeks on Risk-Based Capital Proposal Inadequate

Washington (May 30, 2014) – National Association of Federal Credit Unions (NAFCU) President and CEO Dan Berger issued the following statement today in conjunction with association's lettersubmitted to Congress based on NCUA's response to Rep. Peter King (R-N.Y.) and Rep. Gregory Meeks (D-N.Y.) on the agency's proposed risk-based capital regulation for credit unions.

"From the outset, NAFCU has challenged the need for NCUA to issue the proposed risk-based capital rule as well as their legal authority to do so as proposed. It has been long established that credit unions did not cause the financial crisis.

"Contrary to NCUA's assertions, there is no compelling reason at this time for this sweeping and flawed rule. Credit unions continue to perform well based on their existing prudent business model. We support the idea of a risk-based capital regime for credit unions but we continue to believe that a legislative solution is necessary to achieve a fair system.

"Moreover, the agency's claims of comparability with FDIC standards regarding risk weights ring hollow; NCUA's calculations are far more severe for credit unions. We hope that this is indeed an area which they will review given the thousands of comment letters they have received from credit unions that address the potential devastating impact, specifically concerning real estate loans, member business loans and other investments.

"We continue to believe the agency is underestimating the effect on credit unions' capital cushion. The proposal affects not hundreds but thousands of federally insured credit unions, which will be required to adjust their balance sheets or raise more capital to comply with proposed rule.

"Given the importance and complexity of this issue, NCUA has given it extremely short shrift. If the listening sessions are indeed to be given serious consideration as part of the official rulemaking process, they should have been part of the official comment period. The magnitude of the rule's prospective impact warrants at least the same amount of time as BASEL III, which took nearly three years to develop.

"Ultimately, all these issues point to the fact that the credit union industry would be better served if the agency withdrew the current rule. If NCUA were to move forward on this proposed rule, the agency would need to make significant changes based on the numerous recommendations put forth in the almost 2,000 comment letters submitted. The new proposal would be so different it would require a new comment period to be properly vetted by credit unions."

To access NAFCU's letterand for more information on capital reform, go to www.nafcu.org/capitalreform/.

The National Association of Federal Credit Unions is the only national organization that focuses exclusively on federal issues affecting credit unions, representing its members before the federal government and the public.

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Contact: Patty Briotta | 703-842-2820 | pbriotta@nafcu.org