September 07, 2017

NAFCU-sought RBC 'stop and study' bill reintroduced today

Reps. Bill Posey, R-Fla., and Denny Heck, D-Wash., reintroduced a NAFCU-sought, bipartisan bill today that would require the NCUA to conduct a study on the appropriate capital requirements for credit unions before implementing its final risk-based capital (RBC) rule, which is scheduled to take effect Jan. 1, 2019.

The bill would also require the NCUA to submit its study on the rule to Congress, along with legislative recommendations to improve the credit union capital system.

Over the past three years, NAFCU has consistently opposed the NCUA's RBC rulemaking and urged its withdrawal because of the adverse effects it would have on the credit union industry – particularly as a result of regulatory burdens and costs. NCUA Chairman J. Mark McWatters has indicated that revisiting this rulemaking is on his list of priorities for this year.

"NAFCU thanks Reps. Posey and Heck for reintroducing this important legislation that would help ensure that the NCUA, credit unions, Congress and others fully understand and comprehend the impacts this rulemaking will have on the industry," said NAFCU Vice President of Legislative Affairs Brad Thaler. "Requiring further study of this rule will only benefit the credit union industry and ensure a fair and appropriate risk-based capital system is put into place."

The Risk-Based Capital Study Act of 2017 (H.R. 3736) would require the NCUA to study and report to Congress within nine months on:

  • whether the agency has the clear and legal authority to issue a two-tier proposal;
  • how RBC compares to bank capital requirements;
  • the rationale behind the risk weighting used by the agency; and
  • the impact the rule will have on credit unions' capital cushions.

If the bill is passed, the agency would not be able to implement the RBC rule until 120 days after the report goes to Congress.

While the final rule includes significant NAFCU-advocated changes from its original proposal, concerns about the rule's effectiveness remain.

NAFCU believes legislative changes are necessary to bring about comprehensive capital reform for credit unions, such as allowing credit unions to have access to supplemental capital sources and making statutory changes needed to design a true risk-based capital system for credit unions.