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News Now

Washington
Risk-based capital plan is latest 'Inside Exchange' topic
WASHINGTON (1/31/14)--The basics of the National Credit Union Administration's proposed risk-based capital framework for credit unions, and credit union concerns regarding the proposal, are addressed in the latest edition of the Credit Union National Association's "Inside Exchange."
 
In the video, CUNA Vice President of Communications Pat Keefe, Deputy General Counsel Mary Dunn and Chief Economist Bill Hampel discuss what CUNA is doing to review the proposal, draw on expertise regarding Basel III standards, develop detailed comments on the proposal to the NCUA and encourage the credit union system to weigh in on this very critical proposal. (See related story: CUNA encourages CUs to weigh in on critical capital proposal.)
 

 
The proposal would restructure NCUA's current prompt corrective action regulation to include calculation of a capital-to-risk-assets ratio, analogous to Basel III for community banks. The risk weights would be substantially different, and the proposal would impose higher capital requirements for credit unions with higher concentrations of assets in real estate loans, member business loans, longer term investments and some other assets.
 
The proposal would apply to credit unions with assets of more than $50 million.
 
Although a final rule is not likely to go into effect until 2016 or later, credit unions need to consider the proposal and its impact on their operations right now and submit their comments to the NCUA, state credit union leagues and CUNA, Hampel emphasized.
 
CUNA has posted a comprehensive, but concise, summary of the rule to ensure credit unions are informed about the proposal and to encourage them to weigh in to CUNA, the leagues and the NCUA on this proposal.  The topic will be a major focus of this year's CUNA Governmental Affairs Conference. (See related story: Interactive GAC breakout session to explore risk-based capital proposal.)


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