WASHINGTON (11/13/14)--Leaders of the Senate Committee on Agriculture, Nutrition and Forestry highlighted credit union support of agricultural activities while expressing concern with the National Credit Union Administration's risk-based capital proposal on those activities.
In a letter sent to the agency Wednesday, committee chair Sen. Debbie Stabenow (D-Mich.) and ranking member Sen. Thad Cochran (R-Miss.) asked the agency to consider the proposal's impact on "the ability of credit unions to serve America's farmers and ranchers."
The current proposal would set specific risk weights based on credit union business lending, weights that the senators note are higher than the Basel III risk weights for small banks.
In many rural areas of the country, credit unions are among the only options for agricultural lending, hence the concern from Stabenow and Cochran.
"Concerns have been raised that the proposed risk-based capital rule could negatively affect credit union agricultural lending, thereby decreasing or eliminating funding sources for farmers and ranchers," the letter reads.
"Some credit unions have also raised concerns that because the rule would also apply to credit unions exempted from the federal cap on credit union business lending (which includes agricultural lending), the cap exemption may lose some of its significance and would impact the ability of these credit unions to offer agricultural lending to their members."
The senators conclude by urging the NCUA to give consideration to "possible unintended consequences" of the rule when it comes to credit union agricultural lending.
The NCUA is working now to revise the plan it proposed back in January due to comments by the Credit Union National Association, the state credit union associations, credit unions and many others.
The agency has said it would revise the proposed rule and hold a second comment period. In meetings with agency staff and leaders, CUNA has advocated for the second comment period to be at least 60 days.