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Johnson, Crapo call for 'clear, well-calibrated, effective' RBC rule
WASHINGTON (6/5/14)--The leadership of the Senate Banking Committee has asked federal credit union regulators to carefully consider any negative impact their risk-based capital proposal could have on credit unions' agricultural lending and on their ability to raise and maintain certain capital levels.
 
Sens. Tim Johnson (D-S.D.), the banking panel's chair, and Mike Crapo (Idaho), its ranking Republican member, were addressing the National Credit Union Administration's plan that would replace existing risk-based net worth requirements with new risk-weighted asset and capital requirements. The rule, issued for comment in January, would apply to federally insured "natural person" credit unions with more than $50 million in assets.
 
The senators sent a letter Wednesday to urge the NCUA to finalize rules that are "clear, well-calibrated, and work effectively with other prudential requirements to ensure that there are no unintended consequences."
 
"The NCUA should also provide clear guidance on how credit unions should plan for supervision going forward and provide sufficient time for credit unions to adjust and comply with any new standards," the legislators wrote.
 
The NCUA reports it has received more than 2,000 comments on the risk-based capital (RBC) plan. The Credit Union National Association, in its comment letter, said, "(T)he economic and legal issues spawned by the proposal are numerous, the policy questions are real, and, as evidenced by the overwhelming level of interest in this rule, the stakes for credit unions and their 99 million member owners could not be higher."
 
On Wednesday, CUNA President/CEO Bill Cheney thanked Sens. Johnson and Crapo, on behalf of CUNA and the state credit union associations, for speaking out on the important issues related to the agency's RBC plan.  Cheney underscored that the concerns of the senators must be addressed.
 
He added, "CUNA supports risk-based capital but does not support it in this manner, which is why we continue to urge NCUA to withdraw their proposal. However, if the agency insists on moving forward, reissuing a new proposal for comments from the credit union system and other stakeholders is essential."

CUNA emphasizes a willingness and desire to work with the NCUA on both a comprehensive strategy and on a narrower new rule approach.
 
In a response sent last Friday to 324 members of Congress who voiced concerns regarding the RBC proposal, NCUA Chair Debbie Matz indicated some of the areas in which the agency will consider changes. She noted that risk-weights, implementation time, and the proposal's impact on credit markets were among issues the regulators would review carefully moving forward.


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