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26% of Senate, 76% of House now have voiced RBC plan concerns

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WASHINGTON (8/8/14)--Two more U.S. senators have sent a letter of concern to the National Credit Union Administration regarding its risk-based capital proposal, bringing the total number of Senate lawmakers to weigh in to 26. That's 26% of the chamber's members. And on the House side, the number rose to 332.

Georgia Sens. Saxby Chambliss (R) and Johnny Isakson (R) sent a joint letter Thursday echoing many concerns raised by their colleagues about the limited ability of credit unions to raise capital quickly, as well as if such a proposal is permitted by the Federal Credit Union Act (FCUA).

"The FCUA established a floor for risk-based net worth to take into account situations where the 6% requirement to be adequately capitalized was not sufficient, but it does not allow for a dual risk-based system that your proposed rule would create," the letter reads.

The letter goes on to question whether or not the NCUA has adequately explained the need for the proposed rule, citing the National Credit Union Share Insurance Fund's "exceptional performance" during the financial crisis.

And on the House side, Rep. Mark Meadows (R-N.C.) and Steve Stivers (R-Ohio) sent letters Thursday to the NCUA outlining issues with the proposal. For Meadows, Thursday's letter was a follow-up to the letter he signed in May that was also signed by 323 other representatives. Meadows, along with Rep. Kenny Marchant (R-Texas), signed that letter and submitted an individual one. A total of 332 representatives--76% of the House--has signed a letter with concerns about the proposal.

The May letter asked the NCUA board to take into account implementation costs and burdens, as well as for the agency to provide justification and more clarity as to why proposed risk weights differed from those applied to other community financial institutions.

In his recent letter, Meadows, a member of the House Committee on Oversight and Government Reform, as well as its subcommittee on economic growth, job creation and regulatory affairs, thanked the NCUA for pledging changes to the rule's implementation period and risk weights. He also encouraged the agency to put the rule up for comment again, after it has been revised to incorporate submitted comments.

"While the changes the NCUA have expressed are substantial, I still encourage the NCUA to put the revised rule out for comment again so that stakeholders can weigh in before the final rule is finalized," he wrote.

The Credit Union National Association has also advocated for a second comment period once a revised rule is issued. At the NCUA's Listening Session July 17 in Alexandria, Va., Chair Debbie Matz said there likely would not be a second issuance of the rule. Though, she has emphasized that if the intent of the rule is changed or other reasons under the Administrative Procedure Act require a second round of comments, the agency would follow those statutory requirements. 

"Unless we are in violation of the Administrative Procedures Act, as determined by our general counsel, we don't intend to re-propose the rule," she said. "It's like every other rule we've done, we put it out for comment, we get excellent comments from stakeholders, we review every single one of them, we accept those we think have merit and then we finalize the rule. This rule will not be an exception to that."

Stivers, a member of the House Financial Services Committee, said he was concerned that the proposal places more of an emphasis on "the basic measure of an asset size of an individual credit unions than the holistic assessment of a credit union's portfolio of assets and liabilities," which is the description given in the FCUA.

"Over 4,000 credit unions offer mortgage products that equate to a little over 6.5% of the entire mortgage market and enjoy loss rates well below the national average," he wrote. "The proposed rule will cause credit unions to reduce the availability or affordability of loan products, restricting credit availability to their members."

He went on to say that the supervision of concentration risk might be mort appropriately conducted duing the examination process, which is a concern raised by many of his colleagues.

Other concerns raised by a number of legislators in their letters include the proposed implementation timeline, proposed risk weights and the effects the proposal would have on member lending, particularly in communities with a strong agricultural base.

Audio of NCUA's Chicago Listening Session available on

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WASHINGTON (8/8/14)--An audio recording of the National Credit Union Administration's July 10 Listening Session in Chicago is now available on the Credit Union National Association's website.

The event was the second in a series of three Listening Sessions the agency hosted across the country.

More than 160 people attended the Chicago session, where the primary topic of discussion was the agency's proposed risk-based capital (RBC) rule. NCUA Chair Debbie Matz and board member Michael Fryzel, who hails from Chicago, were in attendance.

Fryzel told those in attendance that "everything is on the table" when it comes to changes to the proposal, and that the goal was "a rule that provides safety and soundness without unduly limiting credit union operations."

Matz said during the session that the proposed rule's 18-month implementation period is likely to be extended, and said while the rule will go forward, the agency would address issues that have been identified.

The session also addressed fines for late call report filers and interest rate risk. (See resource link for related News Now story: 62 CUs pay total $57,750 for late call reports.)

The Illinois Credit Union League provided the audio. CUNA has also posted the audio from the June 26 Listening Session in Los Angeles. The audio from the July 17 session in Alexandria, Va., will be added  soon.

Use the resource links below to access the sessions.

Free webinar examines disaster prep, recovery for CUs

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ALEXANDRIA, Va. (8/8/14)--A free webinar featuring business continuity planning and disaster recovery practices will be hosted by the National Credit Union Administration Aug. 20.

Several NCUA staff members will outline strategies to prepare for and recover from natural disasters. Officials from credit unions that made it through Hurricanes Sandy and Katrina will also share their experiences.

"Recent natural disasters have illustrated the importance of effective contingency planning to ensure that all credit unions are able to fulfill their missions and obligations to their members during natural disasters or other disruptions in their operations," the NCUA said in a release announcing the webinar.

Presenters will discuss how to communicate with members, regulators and vendors, as well as establishing backup and recovery sites in separate locations while planning for a natural disaster. They will also outline ways to restore information technology services and how to return to normal operations after such a disaster.

The speakers will be Dominic Carullo, economic development specialist, NCUA's Office of Small Credit Union Initiatives; Jerald Garner, national field supervisor, the Office of National Examinations and Supervision; and Jason Radde and Ben Cates, both emergency management specialists with the Office of Continuity and Security Management.

The event is scheduled to begin at 2 p.m. (ET) Aug. 20. It will be archived and closed-captioned on the NCUA's videos and webcasts page approximately three weeks following the event.

Watch News Now later this month for more information on disaster preparedness and recovery.

Use the resource links below for registration information and emergency preparedness tips.

CUNA gives overdraft, reg relief suggestions to CFPB

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WASHINGTON (8/8/14)--Minimizing the impact of current rules, pending proposals and contemplated requirements were key themes of a meeting Wednesday between the Credit Union National Association and the Consumer Financial Protection Bureau (CFPB).
Dan Smith, first assistant director of the CFPB's Office of Financial Institutions and Business Liaison, and CUNA's Deputy General Counsel Mary Dunn discussed regulatory relief for credit unions, which remains CUNA's highest regulatory advocacy priority. The association is pursuing that priority with the National Credit Union Administration and other agencies, in addition to the CFPB.
At the meeting, CUNA raised concerns regarding the possible regulation of overdraft plans by the CFPB, as well as a range of other regulatory concerns such as the pending Regulation C proposal to implement changes to the Home Mortgage Disclosure Act under the Dodd-Frank Act.
Dunn said this was done in in recognition of the significant role credit unions play in the financial marketplace for consumers and small businesses.
"CUNA will continue to press for favorable regulatory treatment for credit unions in light of the fact that credit unions did not engage in abusive practices that led to the financial crisis," she said. "More and more credit unions are merging and citing regulatory burdens as a factor. Credit unions need and deserve regulatory relief, and CUNA will continue seeking every opportunity to further that outcome on their behalf."
CUNA has advocated that credit unions should be exempt from overdraft regulations.
Credit unions are consistently reported as having lower overdraft fees than banks. A report from Informa Research Services in April found that the median fee for overdrafting a checking account at is $30.70, while credit unions were at $27.74. In addition, banks with assets greater than $50 billion carry median overdraft fees of $35, while the largest credit unions (with more than $5 billion in assets), charge an average of $25 ( News Now April 2).