LOS ANGELES (6/27/14)--It was a lively back and forth at Thursday's National Credit Union Administration Listening Session here, with credit union participants enumerating their concerns with the regulator's risk-based capital (RBC) plan and the agency responding with thoughts about possible changes to the proposal.
In fact, by about midway through the session NCUA Chair Debbie Matz made it clear that "everything is on the table" regarding possible changes to the RBC plan proposed in January. While she said the agency is not required to put a revised version of the proposal out for a separate comment period--beyond the one that concluded May 28--she also said very clearly that there is "no rush" to the finish line on this rule.
Matz told the session that the risk-based plan for natural-person credit unions started 2 1/2 years ago when the NCUA was working out the problems of the corporate credit unions during the country's mortgage market meltdown. She said the NCUA became frustrated that some credit unions had greater risk than their capital covered.
She said the agency will assess all comments and come up with a better rule, but found it hard to justify not having a risk-based capital RBC rule.
During the session, NCUA Director of Examination and Insurance Larry Fazio emphasized that the agency's intention is not to ask the credit union system to hold more capital, but to ask "outliers" to hold more capital. NCUA Chief Economist John Worth, responding to a credit union concern that the plan, as written, will seriously impact long-term growth in a negative way, said the agency is looking at long-term impact and will integrate those considerations into the "next round."
Credit Union National Association Deputy General Counsel Mary Dunn, attending the Los Angeles session, said the credit union interaction with regulators seemed productive. "Chairman Matz and her staff could not have been clearer that they intend to roll up their sleeves on this proposal and make changes.
"However, it is so important that credit unions must keep up their advocacy efforts, to make sure the changes made are the changes that really are needed," Dunn said.
The Los Angeles session featured 142 registrants, while the upcoming Chicago and Alexandria, Va., sessions are at capacity with 167 and 150 registrants, respectively.
This year's Listening Sessions were announced in February by NCUA Chair Matz and are the first such sessions since Matz hosted a series in 2012. She credited the 2012 sessions as leading to regulatory relief and streamlined examination reports.
Regarding the NCUA's RBC proposal, CUNA was among the more than 2,000 stakeholders filing comment letters with the agency. CUNA called the proposal one of the most potentially harmful new rules proposed for credit unions in the wake of the financial crisis.
Among CUNA's issues with the proposal are claims that it violates the Federal Credit Union Act with its "well-capitalized" requirement as well as hinders credit unions' capabilities to meet member needs, particularly regarding business and mortgage lending.
Legislators from around the country have also commented on the proposal, many in response to concerns raised by their constituent credit unions. One letter sent in May was signed by 324 members of the U.S. Congress and more than 10 current and former senators and additional representatives have also added their voices with individual letters.