June 26, 2014

Berger: RBC proposal is 'Basel III on steroids'

June 27, 2014 – NAFCU President and CEO Dan Berger appreciates NCUA's willingness to make changes to its risk-based capital proposal but expresses concerns about the harmful impact the proposal, in its current form, will have on credit unions in a commentary scheduled to be published today in Bloomberg Brief's Financial Regulation.

"NCUA's proposed rule is essentially Basel III on steroids: It incorporates interest-rate risk and concentration risk into the risk-weighting for a number of asset classes where the FDIC does not," Berger wrote. "The result is a proposal that is onerous for credit unions and places credit unions at a competitive disadvantage to banks."

Berger wrote his editorial in response to a June 12 Bloomberg Brief commentary by NCUA on the proposal, which he said, "oversimplifies the facts of a very complex issue." He noted that credit unions are already required to follow "stringent interest-rate risk requirements" and continue to have "solid underwriting standards" for their investments.

"NAFCU believes it would be more sensible for NCUA to continue to address interest-rate risk through the supervision and examination process, guided by the ample rules and guidance already published on the subject," wrote Berger. "This is just one of many issues in the proposed rule we hope will be addressed before NCUA issues any final rule."

NCUA kicked off its first summer listening session Thursday in Los Angeles. More than a dozen NAFCU member credit unions took part in the session.

NCUA has received more than 2,000 comment letters from credit unions and their trades – including NAFCU – on the proposed risk-based capital rule, and NAFCU is continuing its dialogue with the agency in its effort to ensure any final rule is fair for all credit unions.