ALEXANDRIA, Va.—CUNA, NAFCU and NASCUS all see the new risk-based capital rule as an improvement over the original proposal, but the organizations still have many concerns.
And the primary worry, among CUNA and NAFCU, is that based on credit unions' healthy capital levels, is a risk-based rule needed?
The NCUA board Thursday voted 2-1 to approve the new proposed risk-based capital rule. The new rule reflects many changes asked for from the credit union community, including a lower requirement for a CU to be well capitalized, dropping from 10.5% to 10%.
CUNA President and CEO Jim Nussle said the trade association appreciates that the NCUA board reissued its risk-based capital proposal with many of the improvements that CUNA and the leagues requested.
"We are encouraged that the board listened and responded to credit union concerns, including lowering the 10.5% well-capitalized requirement, lowering some of the risk weights, removing the treatment of interest rate risk, extending the implementation time frame, reducing the number of credit union affected, and addressing the individual minimum capital requirement," said Nussle in a release. "CUNA’s efforts have helped NCUA make progress, but we remain unconvinced that this risk-based capital approach is even necessary, and are concerned about the risk-based well capitalized requirement and the substantial cost the proposal will impose on credit unions. We will continue to be fully engaged with the NCUA board and the credit union system to enhance the revised rule.”
NAFCU President and CEO Dan Berger thanked NCUA for its leadership and hard work on the agency’s second risk-based capital proposal.
“We appreciate the agency addressing several of the key concerns, including the risk weighting and implementation period issues raised by NAFCU, credit unions and lawmakers,” said Berger in a release. “However, we believe this rulemaking is unnecessary. The costs associated with it are shocking given how extremely well-capitalized the industry is today. The huge costs of this proposal, which attempts to address just a few dozen credit unions, reinforces our position that this rule is not necessary and, quite frankly, was never necessary. We believe that risk in credit union operations can be addressed on a case-by-case basis.”
NASCUS in a statement commended NCUA on its “diligent and thoughtful” review of stakeholder comments, and on the numerous beneficial changes that it has made to the proposal over the last several months.
But NASCUS stated it has lingering concerns with certain areas of the rule, including the concentration thresholds for real estate loans and exclusion of supplemental capital.
“It’s gratifying to see that NCUA took our recommendations to heart,” said NASCUS President and CEO Lucy Ito. “We are confident that with continued open dialogue, the remaining issues with the rule can be worked out.”
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