CUNA wants to leave no stone unturned in our pursuit of a vastly improved risk based capital proposal. That is why last week CUNA Deputy General Counsel Mary Dunn filed a comment letter with the Office of Management and Budget (OMB) detailing concerns regarding NCUA’s estimates of the burdens the proposal would create. CUNA will be filing its detailed comments to NCUA on all aspects of the proposal in the coming weeks.
Accurate paperwork burden estimates are required under the Paperwork Reduction Act in order for agencies like NCUA to issue a new rule or amendment that will result in data collection such as the RBC proposal. The public is invited to comment on those estimates, which CUNA has done. A key element of CUNA’s letter to OMB was NCUA’s definition of a “complex” credit union. CUNA seriously questioned the definition which is set at over $50 million in assets, regardless of the credit union’s portfolio. NCUA estimates that such credit unions will be subject to greater annual burden to meet the requirements of the rule but a definition with more precision in defining a complex credit union would spare a number of credit unions from additional reporting and paperwork burdens, to say nothing of additional capital requirements.
We also questioned whether NCUA has properly evaluated the paperwork burden of the proposal given the inadequacy of the analysis it shared with the public. One critical factor that the agency did not include in its analysis is that the proposal would require credit unions to review their policies and possibly make significant changes, such as selling assets or restricting growth, in order to minimize the impact of the proposal. Even for credit unions with $50 million or less in assets, the proposal will mean that they have to plan for compliance well before they reach the rule’s coverage threshold.
As the letter indicated, estimates of the burdens credit unions will face as a result of the RBC rule need complete. This includes the heavy burden of additional capital requirements as well as other related compliance issues that will be created by the rule.