ALEXANDRIA, Va. (9/26/14)--In response to risk-based capital concerns by Rep. George Holding (R-N.C.), National Credit Union Administration Chair Debbie Matz has replied to the legislator, noting NCUA is fully committed to warranted changes.
Holding, a former U.S. attorney, wrote a letter Sept. 16 encouraging the agency to open a second comment period on the proposal, and outlined concerns whether the NCUA has authority to enact such a rule (News Now Sept. 17).
"I want to assure you that I am fully committed to making changes and clarifications to the proposed rule, where warranted and based on all the comments received, to produce good public policy," Matz wrote.
She added that under the proposed rule, based on December 2013 call report data, 92% of all federally insured credit unions would remain well-capitalized, 5% of credit unions currently undercapitalized would remain so and 3% of credit unions would see a reduction in their Prompt Corrective Action category.
In response to Holding's questions about the whether or not the agency has the authority to make such a rule, Matz cited two sections of the Federal Credit Union Act. She said Sections 1790d(b)(1) and 1790d(d)(1) grant the NCUA "broad authority to design reasonable risk-based capital regulations to resolve the problems of federally insured credit unions at the least possible long-term loss to the National Credit Union Share Insurance Fund."
In response to Holding's call for a second comment letter, Matz said that decision would depend on the final changes made to the proposed rule, and that NCUA's general counsel would determine whether the changes warrant a second comment period.
Credit Union National Association Chief Economist Bill Hampel, along with members of CUNA's regulatory advocacy staff, met with each NCUA board member last week to discuss risk-based capital, among other topics. Hampel said that even if a second comment period were not required by the Administrative Procedures Act, it would be helpful to credit unions to get another chance to comment on the modified rule.
"We have suggested that it would just be good public policy to re-issue the rule," he said. "There appears to be no looming threat on the horizon of a dramatically undercapitalized credit union system that needs this proposal in place immediately to avoid significant losses to the share insurance fund, so there would be no harm in a second comment period."
Use the resource link below to access the full text of Matz's letter.