April 17, 2014

King, Meeks circulating letter on risk-based capital

April 18, 2014 – NAFCU is working with Reps. Peter King, R-N.Y., and Gregory Meeks, D-N.Y., to generate signatures for their letter to NCUA Board Chairman Debbie Matz on the agency's proposal on risk-based capital.

The letter will encourage Matz to consider the cost and burden for credit unions of imposing new risk-based capital requirements beyond the current leverage ratio, and how those requirements might affect mortgage and small business credit availability, and to give credit unions more time in which to comply. The letter also asks for "justification and more clarity" about why the proposed risk weights are different from the standards for other community financial institutions.

During a hearing earlier this month, Rep. Ed Royce, R-Calif., questioned NCUA General Counsel Michael McKenna on the proposed rule, echoing NAFCU's ongoing concern that the proposal's risk weights are not accurate reflections of risk.

While questioning McKenna, Royce asked why the proposal's risk weights are higher than those used by the FDIC when the delinquency rate at credit unions is lower than at banks.

McKenna responded that the rule is still in the proposal stage. He said NCUA has received comments on the risk-weights issue and will consider those in drafting the final rule. He also said the agency believes the risk weights are equivalent to those used by the FDIC given the unique nature of credit unions and other factors.

The deadline for comment letters to NCUA on the proposal is May 28.