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CUNA: Why CUs below $50 million threshold need to comment on RBC proposal
WASHINGTON (5/21/14)--Credit Union National Association Deputy General Counsel Mary Dunn urges credit unions--even those under a $50 million-in-assets threshold--to read the National Credit Union Administration's risk-based capital (RBC) proposal, determine the extent to which they could be impacted in the future, and get their comments in to the federal regulator.
The period to comment on RBC plan ends May 28--five business days from today--and 950 comment letters have already been sent, according to the NCUA.
"We're urging credit unions, even if they have less than $50 million in assets, to read the proposal and determine the extent to which they could be impacted into the future. Even if they're not affected by the change right now, they certainly could be," Dunn said. "Credit unions grow, and if this proposal is adopted, it will affect these credit unions' ability to plan their product offerings and investment strategies."
The RBC plan proposed by the NCUA would make changes to Prompt Corrective Action rules, replacing existing risk-based net worth requirements with new risk-weighted asset and capital requirements for federally insured "natural person" credit unions with more than $50 million in assets.
CUNA believes that the rule's requirement that a well-capitalized credit union would need 7% and a RBC ratio of 10.5% that is higher than the proposed requirement for an adequately capitalized credit unions, is in violation of the Federal Credit Union Act. The act does not authorize the NCUA to set a RBC ratio for well-capitalized credit unions that would exceed the RBC component for adequately capitalized credit unions.
"It's important that every credit union understand this proposal, how they might be affected by it and file a comment letter based on their consideration of the proposal," she said.
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