February 12, 2014

Matz: NCUA hearing CUs' capital concerns

NCUA Chairman Debbie Matz, during a webinar yesterday with CFPB Director Richard Cordray, told credit unions the agency takes feedback seriously and that NCUA will do so as it considers next steps for its proposed rule on risk-based capital.

During the webinar, Matz discussed the individual minimum-capital requirements proposal and various concerns surrounding the rule. She said NCUA has been hearing from credit unions, that it sometimes revises its rules between the proposed stage and the final rule and that the agency will take a hard look at credit unions' concerns as the capital proposal moves forward.

NAFCU has raised concerns about NCUA's proposal, noting that the risk weights may not necessarily reflect risk in the system.

Dan Berger
B. Dan Berger

"This one-size-fits-all capital proposal threatens to put credit unions at even further risk – and possibly out of business – by stifling growth, innovation and diversification," said NAFCU President and CEO Dan Berger."This goes well beyond the 200 or so credit unions that their calculator indicates would be affected.

"If this proposal is adopted, it will create a legacy for NCUA of even more consolidation in the credit union industry," Berger continued. "We still strongly believe comprehensive capital reform is needed, and we think the best way to achieve that is through legislation."

NCUA estimates that more than 90 percent of credit unions subject to the proposal would still be classified as well-capitalized. However, NAFCU Chief Economist David Carrier estimates that credit unions with more than $50 million in assets will have to hold $6.3 billion more in additional reserves to achieve their current capital cushion level if the rule is adopted.

NAFCU has completed a Regulatory Alert on the proposed rule and is currently taking comments from members.

Cordray answered questions relating to CFPB's new rules on qualified mortgages and ability-to-repay. Many of the questions and answers discussed can be found on NAFCU's mortgage resource page.