June 25, 2015

AC: Matz says supplemental capital proposal this fall would complement RBC

NCUA is expected to release a proposed rule on supplemental capital this fall with an effective date that would coincide with implementation of risk-based capital in 2019, agency Chairman Debbie Matz told NAFCU's Annual Conference attendees Thursday in Montreal.

Matz, reiterating in her speech that "This is the Year of Regulatory Relief," said NCUA has determined that current law permits the agency to count certain forms of supplemental capital for the RBC ratio. She also said as part of modernizing risk-based capital, "I am committed to counting supplemental capital in full."

Matz reminded that low-income credit unions can already raise and count secondary capital and that a working group assembled earlier by the agency has focused on this.

She said the working group is also discussing potential legislative and regulatory changes benefiting all credit unions interested in raising supplemental capital.

NAFCU has long urged NCUA to take steps under its current authority to allow for supplemental capital, and it is seeking legislation addressing this and other issues to ensure a workable capital regime for all credit unions. At the same time, the association continues to have serious concerns about the agency's risk-based capital proposal and has urged its withdrawal.

One bill, introduced in the House this February, would give credit unions access to supplemental capital that preserves mutuality – an element of comprehensive capital reform NAFCU is seeking from Congress.

Matz, in other remarks at Annual Conference, addressed the agency's plans to:

  • eliminate the 5 percent fixed-assets cap;
  • propose more changes to field-of-membership rules to broaden community charters, improve occupational charters and streamline processes for adding new members;
  • finalize an asset securitization rule;
  • move forward on its proposal on member business lending; and
  • define a "small" credit union as one with less than $100 million in assets.

She also briefly noted the agency's discussion with the Defense Department over the department's proposed Military Lending Act rule, which she said DoD may be ready to modify to ensure credit unions aren't impeded from serving servicemembers.

Carrie Hunt, NAFCU's senior vice president of government affairs and general counsel, said the association welcomes NCUA's efforts to provide credit unions relief from onerous rules. "We look forward to working with NCUA in ongoing efforts to ensure that regulation fosters safe, sound operations and allows credit unions the flexibility they need to thrive and serve members," she said.