Press
CUNA: NCUA should respond to King-Meeks letter with meaningful changes to proposed rule
(May 30, 2014) — Today, the National Credit Union Administration (NCUA) responded to a Congressional letter seeking changes and clarifications to NCUA’s proposed rule risk-based capital for credit unions. The letter, written and circulated by Reps. Peter King (R) and Gregory Meeks (D), both of New York and both members of the House Financial Services Committee, was signed by three quarters of the members of the U.S. House of Representatives.
CUNA President and CEO Bill Cheney issued the following statement:
“CUNA appreciates NCUA’s acknowledgement of the very significant interest on the part of Congress regarding the proposed rule on risk-based capital. We also appreciate Chairman Matz reiterating the Board’s willingness to make changes to the proposal.
The concerns expressed in the King-Meeks letter, signed by three quarters of the House of Representatives, should be carefully considered 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.
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 Senator 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, NCUA should reconsider their 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.”