ALEXANDRIA, Va. (7/29/14)--Sens. Patrick Toomey (R-Pa.), Mike Johanns (R-Neb.) and Deb Fischer (R-Neb.) have written to the National Credit Union Administration, asking for justification for the agency's risk-based capital proposal.
Toomey, the ranking member of the Senate Banking subcommittee on financial institutions and consumer protection, said the matter is of great interest to him given its "potential impact on credit unions, their members and the communities they serve." He is also a member of the Joint Economic Committee and the Senate Finance Committee.
"I would be concerned with any proposal that exceeds the authority of the board and imposes undue regulatory burden on credit unions and potentially hampers access to credit in local economies," he wrote.
Among several requests, Toomey asks the agency where the statutory authority for the proposal comes from. He cited a section of the Federal Credit Union Act that limits the NCUA board's authority to impose risk-based capital requirements on well-capitalized credit unions.
He also requested information as to why the NCUA claims authority to impose individual capital requirements, saying that while the Federal Deposit Insurance Corp. has that authority, it is not given in the Federal Credit Union Act.
Toomey also expresses concern about adding capital requirements to institutions rather than relying on a case-by-case basis.
"Regulation of concentration and interest rate risk is generally a matter that is supervised on a case-by-case basis as part of credit unions' examinations," he wrote. "Please explain why the board believed that regulating concentration and interest rate risk through new capital requirements is better than relying on NCUA examiners to monitor concentration risk of individual credit unions."
Johanns and Fischer, in a joint letter sent Monday, also expressed concerns that the rule is too stringent, and urged the NCUA to take into account the more than 2,000 comments sent when making a final decision.
"Commuity financial institutions are the lifeblood of our small towns and our small businesses," they wrote. "The new proposed risk weights may be unduly burdensome on credit unions that have high concentrations of business and agricultural lending."
NCUA Chair Debbie Matz said last week that the agency would re-examine several aspects of the plan, in response to comments received. This includes reducing the risk weights on investments, mortgages, member business loans, credit union service organizations and corporate credit unions, as well as additional time for implementation.