WASHINGTON (5/28/14, UPDATED 7:33 p.m. ET)--The National Credit Union Administration should not proceed with its proposed rule on risk-based capital (RBC), the Credit Union National Association wrote in its comment letter submitted today. CUNA believes that the proposal has serious flaws and could damage credit unions, and has recommended that the proposal be withdrawn on the grounds that the NCUA has not established economic or legal grounds as a basis for their proposed changes.
"Credit unions have been subjected to a number of new rules in the wake of the financial crisis, but none of them is as potentially harmful as this proposal," the CUNA comment letter, signed by CUNA President/CEO Bill Cheney, states. "Indeed, the economic and legal issues spawned by the proposal are numerous, the policy questions are real, and, as evidenced by the overwhelming level of interest in this rule, the stakes for credit unions and their 99 million member owners could not be higher."
CUNA's 47-page letter lists several key defects in the NCUA's proposal, including:
CUNA instead advocates for the current system to be retained alongside "positive and meaningful reform" related to capital and prompt corrective action. This reform would involve congressional and regulatory action, and encourage the following:
Among the other recommendations CUNA makes in its letter:
"CUNA has historically supported risk-based capital but cannot support this proposal," Cheney states in the CUNA letter. "We urge NCUA to address the numerous fundamental issues we are raising by incorporating our recommendations and reissuing a new proposal for comments from the credit union system and other stakeholders."
Use the resource link for CUNA's comprehensive letter.