While NCUA's revised risk-based capital (RBC2) proposal contained many changes CUNA wanted, the proposal is still "a solution in search of a problem," particularly given the likely costs to credit unions, says CUNA President/CEO Jim Nussle.
The NCUA board approved the proposal Thursday by a 2-1 vote, with board member J. Mark McWatters casting the dissenting vote.
NCUA Director of Examination and Insurance Larry Fazio estimates the one-time costs for credit unions to read the rule and make the appropriate operational changes to be approximately $5.1 million, News Now reports. He also estimated an annual cost of less than $1 million from credit unions in labor for new call report requirements.
This led Nussle, along with National Association of Federal Credit Unions President/CEO Dan Berger, to again question the necessity of having the rule at all.
"Based on the healthy capital levels across the credit union industry and the millions of dollars in costs associated with this proposed rule, our respective organizations still have serious issues with it and continue to question the necessity of the proposal," according to a joint statement issued Thursday.
However, the rule contains many improvements CUNA sought in its original comment letter and in its advocacy efforts throughout last year.
"The changes respond to the major criticisms we levied against the original proposal. As a result, it is a step toward a more palatable final rule, and the entire NCUA board is to be commended," Nussle says. "However, RBC2 is far from perfect, and CUNA and the leagues will again provide analysis and support for credit unions to generate comments to drive further improvements."
The 90-day comment period for the proposal will not start until it is published in the Federal Register, which could be a few weeks.
For more information, visit CUNA's Risk-Based Capital Action Center or Risk-Based Capital blog.
Watch a video recording of the NCUA Board meeting here:
(Via News Now)