Greg Smith, PSECU
WASHINGTON—Will the second risk-based capital proposal from NCUA draw as many comments as the first? A quick poll of CU executives at CUNA’s GAC indicates maybe not.
Several CU leaders said that they either will not comment, or are uncertain, some citing how long it is taking to finalize a rule, how the rule may not be needed, and that time to look over the rule is an issue—this being the second lengthy capital proposal in under a year.
NCUA on March 12 reported that 300 comment letters had been received. More than half have come through CU*Answers, which recently joined with several other organizations on “Credit Union Voices,” an effort to generate more RBC comments. That effort included a booth at which one could provide comment in the trade show at the GAC.
NCUA spokesperson Ben Hardaway said it is difficult to determine if the current pace of comments is above or below what occurred during round one. Both comment periods are 90 days, with April 27 being the deadline for round two. Hardaway reminded that the pace of comments accelerates as a deadline draws near.
One CU executive from Oregon attending the GAC shared that his credit union is feeling some apathy toward the entire RBC process. Asked if his CU
David Ackerman, USX FCU
planned to comment, the attendee said, “No comment.”
The executive explained that the time it is taking to get the rule finalized and how the rule “seems to be going back and forth,” has led the CU to become uncertain about “when the rule will come to pass. When that may be, we have no idea.”
Greg Smith, CEO at the $4.3-billion Pennsylvania State Employees CU in Harrisburg, Penn., did not say if he will or will not comment. He emphasized that his credit union will not be impacted by the final risk based capital rule “because we don’t have any types of the issues adversely scored in the new capital program. I agree with (CUNA CEO) Jim Nussle that this is a solution in search of a problem, and is a rule that is generally not needed.”
David Ackerman, CEO at the $210-million USX FCU in Cranberry Township, Penn., said he will decide soon whether he will comment or not, after he finds time to closely review the second proposal. “I really have not studied it closely since it came out,” he said.
Ackerman did comment on the first proposal. “And I have a basic level of concern with risk-based capital overall. It can have the tendency to dictate how a CU would construct its balance sheet, and CUs are not designed to be one size fits all. They are designed to fit their members’ needs.”
Joe Kregul, HACU
Sam Whitehurst, Summit CU
Joe Kregul, CEO at the $275-million Healthcare Associates CU in Naperville, Ill., plans to provide feedback.
“I definitely will, and I have a little more time. I have taken a close look at the rule and it’s better than the first, and maybe better yet when all is said and done.”
Sam Whitehurst, CEO at the $160-millon Summit CU in Greensboro, N.C., commented on the first proposal and plans to mail back the same response.
“NCUA did not fix some of the key issues my credit unions has with the rule,” he explained.
Carrie Hunt, NAFCU SVP/general counsel, acknowledged that round two is likely to draw fewer comments, but not by a lot, she predicts.
“Any time you have two comment periods for the same rule you don’t see quite as many comments the second time.”
Asked whether the decision to raise the rule’s carve-out to $100 million in assets, and CEOs simply thinking they don’t need to comment after they did the first time are working to limit responses, Hunt agreed those things could impact CEO thinking.
“But we are still about a month-and-a-half away from the deadline. Credit unions need to look closely at the rule, carefully determine the impact on their credit union—and not just in terms of this rule but what also will happen down the road with NCUA’s other approaches to managing risk,” Hunt said. “There absolutely needs to be as much pushback with RBC 2 as there was with RBC 1.”
To help drive more comments, NAFCU—as it did during the first risk-based capital comment period—is providing on its website talking points member CUs can use to shape their letters. “These points include the issues NAFCU has found with the rule, and issues to consider,” said Hunt. “But these talking points are not meant to create cookie-cutter comments. Credit unions will add their own perspectives.”