ALEXANDRIA, Va. (6/26/14)--As the National Credit Union Administration prepares for its first Listening Session of the year today in Los Angeles, the agency continues to receive comments from federal lawmakers regarding their proposed risk-based capital (RBC) rule. On Wednesday Sen. Jeff Merkley (D-Ore.) became the latest legislator to send his comments to the agency.
While Merkley said he supported the idea of the NCUA taking steps to ensure the stability of credit unions, he highlighted several concerns brought to him from Oregon credit unions.
"[C]redit unions' current capital regulation is a source of strength for their balance sheets," he wrote. "It allows them, as small institutions, to manage their risks in a simple way and serve their members and communities through even the toughest downturns. In short, those leverage rules should be maintained."
He pointed to past experiences with risk-based capital requirements at banks, which Merkley said have historically added complexity without building enough capital to absorb losses in a financial crisis.
"It is also worth remembering that credit unions are cooperatives and are not able to raise capital from new shareholders like banks. Asking them to change their approach to capital should be done carefully and only with sufficient time to adjust, lest those changes unduly impact their ability to serve their members," he wrote.
Merkley cited concerns from credit unions with assets as small as $50 million, many of which serve low-income communities in Oregon, that are concerned about being viewed as "complex" under the new rule. He urged the NCUA to exercise care in applying the proposed rules to institutions that can truly be defined as complex.
Today's NCUA Listening Session from Los Angeles will be from 1 to 4 p.m. (PT), however, it will not be streamed online. Watch News Now for more details.
Two other listening sessions will be held--one from 1 to 4 p.m. (CT) July 10 in Chicago and one at the NCUA headquarters in Alexandria, Va., from 1 to 4 p.m. (ET) July 17.