WASHINGTON (6/24/14)--National Credit Union Administration Chair Debbie Matz reiterated the agency's willingness to consider significant changes to its risk-based capital proposal in a meeting with the Credit Union National Association.
During the meeting Thursday, which included agency senior staff, CUNA raised a number of concerns. The association's analysis indicates unnecessary and harmful overcapitalization would result if the proposal is adopted as issued for comment in January.
"We are encouraged that NCUA is considering revisions to many, if not most aspects, of the proposal," CUNA Interim President/CEO Bill Hampel said. He emphasized that many credit unions question the need for a new RBC proposal, given the health and economic performance of credit unions during the recent severe financial crisis. CUNA strongly opposes the current proposal, as addressed in its comment letter filed May 28 with the agency (see resource link).
Matz stated that the agency has had many internal discussions on a number of the issues that CUNA has raised and welcomed further dialogue with the association and credit unions. A central theme of the discussion was how to distinguish the small number of problem credit unions that should hold more capital from well-run credit unions that already have more than sufficient capital and can manage their risks while covering any losses.
"We feel the discussion was frank and constructive," said CUNA's General Counsel Eric Richard.
Consistent with its comment letter, CUNA is urging the agency to adopt a range of recommendations to achieve a more favorable outcome for credit unions, which Hampel Richard, and Deputy General Counsel Mary Dunn raised during the meeting. The key revisions that CUNA is seeking including major improvements to:
Hampel highlighted CUNA's concern that interest rate risk should be addressed as a supervisory or regulatory issue, and not as part of a risk-based capital requirement. He also recommended that supplemental capital should be permitted by regulation for RBC purposes for any federally insured credit union.
"CUNA will be continually following up with NCUA over the coming weeks and months on the RBC proposal to maintain the dialogue and reinforce our members' concerns. We look forward to future productive discussions with Chairman Matz and agency staff on our recommendations," Dunn said.
The official comment period for the proposal ended May 28. The NCUA is now holding three public Listening Sessions across the country to give interested parties more opportunity to comment and ask questions. The first session is Thursday in Las Vegas, Nev.