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NEW: Concerned about RBC proposal, 75% of U.S. Reps. sign letter to NCUA
WASHINGTON (5/13/14 UPDATED 9:30 A.M. ET)--A bipartisan collection of more than 320 U.S. House members have joined Reps. Peter King (R-N.Y.) and Gregory Meeks  (D-N.Y.) to express their concern over the National Credit Union Administration's proposed risk-based capital regulation.
In particular, the lawmakers urge the federal agency to ensure the proposal does not adversely affect small businesses and credit union members.
"An overwhelming majority of the House--three in every four members--have come together in a bipartisan effort by Representatives King and Meeks to express concern over NCUA's proposed rule," said CUNA President/CEO Bill Cheney. "CUNA supports risk-based capital--but not the way that NCUA has proposed it. The fact that so many members of Congress have added their voices of concern bolsters credit unions' views that this proposal must be changed significantly.
"CUNA and the state leagues and associations thank the members of the House for speaking out on this key issue for credit unions--and we pledge to work with lawmakers to see that their concerns are addressed," Cheney said.
At issue is a proposal by the NCUA to impose on credit unions with greater than $50 million in assets new standards that would restructure the agency's current "prompt corrective action" regulation to involve calculation of a capital-to-risk-assets ratio, analogous to Basel III for community banks--although the risk weights would be substantially different for credit unions.
The NCUA proposal would change risk-based capital ratios and require higher minimum levels for credit unions with concentrations of assets in real estate loans, member business loans, or high levels of delinquent loans.
The letter encourages the NCUA to:
  • Take into account the cost and burden of implementing new risk-based capital requirements beyond the current leverage ratio;
  • Provide justification and more clarity as to why the proposed risk weights differ from those applied to other community financial institutions; and
  • Give credit unions more time than the proposal's allotted 18 months to come into compliance after it is finalized.
"During the financial crisis, natural person credit unions served as an important source of liquidity in local communities and the overwhelming majority of them successfully weathered the downturn. These cooperatives did not engage in the risky lending practices that led up to the crisis and nearly all maintained their well-capitalized status," the letter notes.
"It is almost unprecedented for a letter to generate this much bipartisan support in such a short period of time," said Ryan Donovan, CUNA's senior vice president of legislative affairs. "At time when it is difficult to get Congress to agree on much of anything, more than 320 members speaking in one voice sends a message to NCUA that should be loud and clear."
The congressional co-signers include several traditional credit union supporters and members of the House Financial Services Committee, as well as a healthy number of members who have never publicly supported credit unions. The partisan breakdown on the letter, 173 Republicans and 151 Democrats, very closely aligns the partisan breakdown in the House of Representatives.
"Credit unions should be really pleased to see such balanced support for the letter. One might expect members who have co-sponsored supplemental capital or member business lending legislation to support the letter," Donovan said, adding, "But the letter is also supported by almost everyone on the House Financial Services Committee--the committee that provides oversight to the NCUA--and there are several dozen members on the letter who have not previously co-sponsored credit union legislation, and who did not write banking regulators during the BASEL III process.
"It really speaks to members of the House of Representatives understanding the concerns credit unions have regarding the proposed rule," he noted.
Comments on the RBC plan are due to the agency by May 28.

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