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Board Member Fryzel Responds to CUNA Saying He Believes in Taking the Time to get the RBC Rule Right

NCUA Board Member Michael Fryzel has responded to CUNA’s request to extend the RBC comment deadline beyond May 28.  Mr. Fryzel explicitly stated that he supported extending the comment deadline and would have voted to provide more comment time if the issue was put up for vote at an NCUA board meeting.  That is not at all likely and the comment deadline remains May 28, but it was good to hear his support. 

The key point in his letter, though, was that he stated he “is confident that significant changes” will be made to the final RBC rule. That is certainly what we are working hard every day to achieve.

Board Member Fryzel added, "I am a firm believer in taking the time to get a rule right. During the corporate crisis, quick decisions were necessary.  We did not have the luxury of time. Fortunately, we are not in a crisis mode and should take this opportunity to proceed with all appropriate care and precision. The NCUA Board can afford to take the time to get it right."

We totally agree!! We urge the rest of the NCUA Board, as well as incoming NCUA Board Member-designate Mark McWatters to adopt this go slow and get it right approach.  

This leads to a question that we have received from several members asking how long it will it take for NCUA to issue a final rule.  Theoretically, NCUA could issue a final rule at the June open board meeting, which is the first board meeting after the comment deadline, although that is not likely either and would raise serious questions about whether the agency followed legal procedures in evaluating comments sufficiently. 

A review of all of NCUA’s final rules since 2013 indicates that the time between proposed and final rule issued by NCUA varies widely between 3 months and over two years.  We think the time interval after comment closing is probably a better way to figure the minimum time to issue a final rule because rule drafting is technically not supposed to start until the comment period actually closes.  Looking at the agency’s derivatives and stress testing final rules, NCUA took 4 months and 5 months, respectively, to issue final rules after the comment period closed.  It took the banking regulators a number of years to develop a proposal and almost one a year from the time the proposal was issued until their final Basel III rules were adopted. Even more time was provided for banks to come into compliance.    

Because of the complexity of the proposal and the number of comments that NCUA is receiving –  we think that the agency should take considerable time to craft a final rule that “gets it right” and addresses all material issues raised by commenters.

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