WASHINGTON (10/3/14)--Credit Union National Association President/CEO Jim Nussle has commended agency support for a revised risk-based capital (RBC) proposal and second comment period in a letter to all three National Credit Union Administration board members.
NCUA Chair Debbie Matz announced this week she would request a revised proposed rule (News Now Sept. 29).
Board member Mark McWatters has stated on several occasions, including in a meeting with senior CUNA staff, that he would not vote on a final RBC rule without a second comment period. Vice Chair Rick Metgser has supported structural changes in the RBC proposal, even if such revisions would result in another round of comments.
In the CUNA letter Thursday, Nussle called the proposal "the most important regulatory issue facing credit unions today, with enormous stakes for them and their members."
"As CUNA, league presidents, credit unions and others have urged, another comment period will help ensure that the final rule targets outliers that should hold additional capital in order to mitigate risks without unduly burdening other credit unions in the process," Nussle wrote. (See related story: CUNA, leagues applaud NCUA decision for 2nd RBC comment period.)
Nussle said that providing a second comment period is the "right thing to do." He also urged that the NCUA reduce the RBC threshold for well-capitalized credit unions.
"Lowering the proposed 10.5% RBC component for well-capitalized credit unions is also the right thing to do, as a number of credit unions would otherwise see their net-worth ratios decline below the well-capitalized level," he wrote.
Nussle added that if the threshold is not reduced, the capital buffers for a number of other well-capitalized credit unions would decrease, an outcome he called "unwarranted, and among other things, would discourage self-generated, voluntary measures by credit unions to strive for their own standards of capital adequacy beyond the force of regulation."
CUNA said it looks forward to continuing to work with the NCUA to achieve a final RBC rule that will accomplish reasonable safety and soundness objectives without penalizing healthy credit unions.