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CUNA: NCUA should respond to Hill RBC concerns with meaningful changes to proposal
ALEXANDRIA, VA. (6/2/14)--The National Credit Union Administration responded Friday to 324 federal lawmakers who voiced concern about the agency's proposed risk-based capital plan. The bipartisan collection of House members joined Reps. Peter King (R-N.Y.) and Gregory Meeks (D-N.Y.) earlier this month to express their concern over the NCUA proposed rule and urged the federal agency to ensure the proposal does not adversely affect small businesses and credit union members.
Credit Union National Association President/CEO Bill Cheney immediately issued a statement expressing CUNA's appreciation of the NCUA's acknowledgement of the very significant interest on the part of Congress regarding the proposed rule on risk-based capital. He also thanked Matz for reiterating the agency's willingness make changes to the proposal.
However, Cheney emphasized that the concerns expressed in the letter from Capitol Hill, signed by three-quarters of House members, might not be acknowledged through changes by the board as it finalizes the rule.
"Congress is concerned that NCUA is proposing risk-weights that are, in some cases, more stringent than the standards imposed on small banks; they don't want a rule that has a significant adverse impact on otherwise very healthy credit unions; and they want credit unions to have more than enough time to comply with the rule. It is critical that NCUA respond to these concerns not only with today's letter, but with meaningful changes to the final rule," the CUNA leader said. 
He added, "We strongly encourage the board to also give very careful consideration to the views of the members of Congress who worked on H.R. 1151 in 1998. Former Banking Committee Chairman Alphonse D'Amato, former Sen. Richard Bryan and former Speaker Newt Gingrich, all have expressed concern that the proposed rule would exceed the authority conveyed to NCUA in 1998.  The congressional intent is clear in the minds of these lawmakers, and the final rule should be consistent with that intent."
Finally, Cheney stated, the NCUA should reconsider its portrayal of the impact the proposed rule would have on credit unions. 
"The agency knows very well that credit unions operate with capital cushions at the behest of their examiners and to avoid inadvertently dropping below required capital levels.  While the rule would not require them to maintain these capital buffers, commonsense and sound business practice do. 
"Nothing in the proposed rule alters the reality that most credit unions will not want to live on the edge of prompt corrective action, especially in light of this new complicated rule. There is absolutely no doubt that impact this proposal, if finalized, will be more significant than the estimates generated by NCUA," Cheney warned.

While on one hand the NCUA letter to lawmakers attempts to refute concerns involving such critical subjects as implementation costs, raised by CUNA and others; on the other the agency assured it will remain mindful of the costs and benefits of the rule so credit remains available. 
Matz also acknowledge the volume of comments letters--estimated by the agency Friday morning to be around 2,000--and the length of some comments--like CUNA's 47-page letter--and said they indicate a thoughtful review of all relevant issues. She pledged that before adopting a final rule, all comments will be analyzed and evaluated and noted the board member will carefully consider comments on risk weights including those for mortgages, agricultural loans and member business loans.
On another important point, Matz assured that the agency would reevaluate whether the proposed 18-month implementation period should be extended.


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