WASHINGTON—The Congressional Budget Office (CBO) found that a bill to prevent the National Credit Union Administration's risk-based capital rule from going into effect on Jan. 1, 2019, would increase losses to the National Credit Union Share Insurance Fund (NCUSIF), according to one person’s analysis.
HR 4464, Common Sense Credit Union Capital Relief Act of 2017, "would reduce the amount of capital that certain credit unions would be required to hold and would change how credit unions account for the risk profile of their assets to federal regulators," according to the CBO.
“CBO wrote that lowering the amount of capital that a credit union must hold would increase the likelihood that a credit union would fail. As a result, this would lead to higher losses to the NCUSIF,” said Keith Leggett, the former senior vice president and senior economist at the ABA, on his blog.
CBO's baseline projection for the NCUSIF’s gross cost is $1.2 billion over the 2018-2027 period. CBO estimates that enacting the bill would increase gross NCUSIF cost by almost one-third over the same time period, Leggett said.
However, CBO notes that NCUSIF losses would be offset by higher premiums and fees paid by credit unions.
“Therefore, the bill would have minimal impact on the federal deficit. CBO estimates net direct spending under the bill would increase by $50 million over the 2017-2018 period. This increase in net direct spending is due to a lag between the timing of losses and assessments,” said Leggett.