WASHINGTON (7/17/14)--As the National Credit Union Administration launches its final credit union Listening Session today, it is to a back drop of assurances that the agency's risk-based capital proposal will undergo changes in key areas before it is made final.
The NCUA confirmed to News Now that when today's session in Alexandria, Va., ends around 4 p.m. (ET), the agency's process going forward will be continued review of the proposed rule--particularly in the area of risk weights--and of the comments that have been made. Further, the agency said it will take "the time necessary" for a thorough review.
As NCUA Chair Debbie Matz said in the earlier Listening Sessions held in Los Angeles and Chicago and as confirmed Wednesday, credit unions can anticipate changes in the proposed risk weights, especially in the areas of mortgages, member business loans, investments, credit union service organizations, and corporates credit unions. Also, the agency spokesman said the implementation period for the rule will be extended beyond the 18-months currently proposed.
"Any final rule will be clear on the point that the NCUA board, not individual credit union examiners, will make determinations about whether a specific credit union needs to hold more capital," the spokesman added.
"Nonetheless," interim President/CEO Bill Hampel stated, "while CUNA welcomes those changes, CUNA remains concerned as to whether the revisions NCUA is contemplating will be significant enough to result in the kind of improvements credit unions need and that they, the leagues, and CUNA are seeking." For example, CUNA will continue to urge the NCUA to reduce the proposed risk-based capital requirement for well-capitalized credit unions, which CUNA says is out of proportion with the level of risk that credit unions present. CUNA also supports the inclusion of the 1% National Credit Union Share Insurance Fund deposit in the RBC calculation.
Like the previous two gatherings, today's session has a capacity crowd of 150 people registered. Although open to any topic of credit union interest, the agency's risk-based capital proposal has been the chief concern in the past assemblies and is expected to retain its place on center stage today.
Several credit union representatives at the Chicago session requested a new comment period, due to the significant changes that are likely to come as a result of the more than 2,000 comments received and the Listening Sessions. CUNA also supports allowing credit unions to comment again on a revised proposal.
Matz said if significant changes are made to the rule's intent it will require a new comment period.
Credit Union National Association Deputy General Counsel Mary Dunn was in attendance at both sessions, and said the agency seems committed to "roll up their sleeves on this proposal and make changes." She and other CUNA staff will be attending today.
Earlier this week, CUNA testified before the House Financial Services subcommittee on financial institutions and consumer credit, laying out its case against the RBC proposal, and calling for the agency to withdraw the proposal and instead pursue RBC standards as part of a multi-faceted reform strategy.
In its testimony Tuesday, CUNA made note of objections to the proposal's interest rate risk scheme, the discounting of the 1% deposit credit unions place in the NCUSIF and with the proposed rule's asset-based definition of a "complex" credit union.
Matz said at last week's session in Chicago that the RBC proposal would be implemented, but the agency would "address the issues that have been identified."