WASHINGTON (2/21/14)--Is your credit union, like many others, concerned by the National Credit Union Administration's risk-based capital proposal? The Credit Union National Association has developed a new tool, the Risk Based Capital Action Center, which will allow CUNA members to directly write NCUA in a quick and efficient way and submit their comments electronically with the click of a mouse.
The page, hosted at www.cuna.org/riskbasedcapital
, provides background information on the rule and highlights CUNA's initial concerns about the rule.
"We think that comment letters on this proposal will make a real difference, and so it is very important that we generate as many as possible," CUNA President/CEO Bill Cheney said.
As CUNA General Counsel Eric Richard noted, "the tool helps credit unions craft their letters through a series of responses to fill-in-the-blank questions. Users are not required to address all of the questions, just the ones on which they would like to comment."
Users can also comment on other topics presented by the proposal that are not addressed by the questions.
The proposal would restructure NCUA's current prompt corrective action regulation to include calculation of a capital-to-risk-assets ratio, analogous to Basel III for community banks. The risk weights would be substantially different, and the proposal would impose higher capital requirements for credit unions with higher concentrations of assets in real estate loans, member business loans, longer term investments and some other assets.
The proposal would apply to credit unions with assets of more than $50 million.
CUNA estimates that the rule, if made final and implemented, would lead to credit unions needing to hold as much as $7.3 billion in additional capital.
Although a final rule is not likely to go into effect until 2016 or later, CUNA Deputy General Counsel Mary Dunn said credit unions need to consider the proposal and its impact on their operations and submit their comments to the NCUA, state credit union leagues and CUNA.
For the CUNA tool and more on the proposed rule, use the resource link.