WASHINGTON (8/6/14)--The National Credit Union Administration's risk-based capital (RBC) proposal raises concerns about credit unions' ability to compete with community banks, said Sen. Sherrod Brown (D-Ohio). Brown, chair of the Senate Banking subcommittee on financial institutions and consumer credit, wrote to the agency to share concerns from Ohio's credit unions.
"Numerous entities have noted that the proposal applies risk weights to mortgages and member business loans that are substantially higher than those applicable to community banks under their risk-based capital rules," the letter reads. "While the NCUA has been urged to address credit union lending concentration, it seems appropriate to consider credit unions' concern about parity."
Brown said he supports heightened capital requirements to "lower both the frequency and the cost of financial institution failures," but he echoed concerns from Ohio credit unions, especially when it comes to raising capital from limited sources.
To date, more than 30 legislators have written to the NCUA with concerns about its RBC proposal, in addition to 324 representatives that signed a letter in May with similar concerns.
NCUA Chair Debbie Matz has said the proposal will undergo changes, notably to the proposed 18-month implementation period, as well as risk weights.