WASHINGTON (9/9/14)--Federal legislators on both sides of the aisle have joined their voices with the unprecedented 2,056 comments from people and organizations expressing concerns with the National Credit Union Administration's risk-based capital (RBC) proposal. Since the rule was proposed earlier this year, 359 senators and representatives have weighed in.
"The interest in this issue on Capitol Hill is extraordinary. More than 75% of the House has weighed in with the agency already, and they've been joined by a healthy amount of the Senate, including the chair and ranking member of the Senate Banking Committee," said Ryan Donovan, senior vice president for legislative affairs for the Credit Union National Association. He made his comments in a recent legislative update for CUNA members.
"The strength of the concern and the bipartisan distribution of the concern has sent a powerful message to the NCUA, which we hope will result in significant changes to the rule when is finalized."
The efforts began with a letter signed by 324 Representatives, which was sent May 15. Over the next three months, 27 senators (nine Democrats and 18 Republicans) and an additional 10 representatives, including several who also signed the May 15 letter, weighed in with their concerns.
As of today, 332 representatives (152 Democrats and 180 Republicans), including 54 out of the 61 members of the House Financial Services Committee, have written or signed letters.
Most of the legislators have weighed in on some, if not all, of the following issues in their letters:
NCUA Chair Debbie Matz and board member Rick Metsger have indicated there will be adjustments to the above areas when the rule is rewritten in response to feedback.
However, most of the letters also expressed concerns about whether or not the NCUA has the authority to enact its RBC proposal, a concern that hasn't yet been publicly addressed by the agency.
Section 1790d of the Federal Credit Union Act states, "the board shall design the risk-based net worth requirement to take account of any material risks against which the net worth ratio required for an insured credit union to be adequately capitalized may not provide adequate protection."
That language was added to the Federal Credit Union Act in 1998, with the passage of the Credit Unions Membership Access Act.
Former Sen. Alphonse D'Amato, a past chair of Senate Banking Committee, wrote in his comment letter that the law was designed to instruct the NCUA to construct only a risk-based net worth floor, for situations when the 6% requirement to be considered adequately capitalized was not sufficient.
"If we had intended there should also be a separate risk-based requirement to be well capitalized, in addition to the 7% net worth ratio, we would have said so," D'Amato wrote.
CUNA met with Matz, Metsger and NCUA senior staff last week, continuing proactive efforts to request changes in the proposal.
"Our discussions have been an opportunity for us to continue the discussion regarding the need for sweeping changes to this proposal," said Mary Dunn, CUNA's deputy general counsel/senior vice president for regulatory affairs.