WASHINGTON (6/3/14)--In a response sent Friday to 324 members of Congress who voiced concerns regarding the National Credit Union Administration's risk-based capital (RBC) proposal, NCUA Chair Debbie Matz indicated some of the areas in which the agency will consider changes.
Matz was responding to a letter sent to the agency on May 15 authored by Peter King (R-N.Y.) and Gregory Meeks (D-N.Y.). Most notably the letter questioned the effect the proposal would have on credit unions and their members, as well as the proposed risk-weight calibration and the timeline for compliance.
Matz said in her letter, and the other NCUA board members have mentioned on numerous occasions, that the feedback submitted, which includes more than 2,000 comment letters received, would be taken into account as the agency moves forward to finalize a RBC plan.
In her letter on Friday, she noted that risk-weights, implementation time, and the proposal's impact on credit markets were among issues the regulators would review carefully moving forward. The King-Meeks letter expressed concern the proposed concentration-based risk weightings could affect mortgage and small business credit availability.
"[A]s part of the rulemaking process, the NCUA Board will carefully consider the comments received when determining how best to calibrate the final risk weights, including any comments received about the risk weights for real estate loans, agricultural loans, and member business loans," she wrote.
The NCUA has proposed several risk weights, such as a lower 75% for credit unions' consumer loans compared to the banking system's risk weight of 100%.
As far as the implementation timeline, Matz said she shared the concern in the King-Meeks letter, and pledged that the NCUA would re-evaluate the amount of time needed before the final rule goes into effect. The NCUA plan currently sets the implementation period at 18 months.
Matz also said that, upon issuing the final rule, the NCUA will provide further clarity as to how they calculated risk weights, and why they may in some instances differ from the risk weights for federally insured banks.
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