WASHINGTON (5/14/14, UPDATED 9:40 a.m. ET)--National Credit Union Administration board member Michael Fryzel, responding to a letter from the Credit Union National Association, said that he is confident that significant changes will be made to the agency's current risk-based capital proposal for credit unions before it is finalized, reflecting a message that the agency chair and other board member have also stated.
However, Fryzel parted ways with his fellow regulators in his letter to CUNA when he said that if the question of extending the comment deadline on the proposal--as CUNA has recommended--came before the board for a vote, he would vote for an extension. That opinion, however, puts him in a two-to-one minority as the others on the three-person board have told CUNA that they believe the current May 28 deadline is sufficient for comment gathering.
Fryzel was responding to a joint request by CUNA and the National Association of Federal Credit Unions for the comment extensions.
He wrote, " I am confident that, when the NCUA finalizes the risk-based capital rule, it will include significant changes from what has been proposed, and will incorporate the suggestions of your trade associations and credit unions across the country.
"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. "
The NCUA proposal would make changes to Prompt Corrective Action (PCA) rules, that would replace existing risk-based net worth requirements with new risk-weighted asset and capital requirements. The rule would apply to federally insured "natural person" credit unions with more than $50 million in assets.
CUNA supports risk-based capital, but strongly opposes the proposal the NCUA has issued for comment. Working with its Examination and Supervision Subcommittee, CUNA is developing its comment letter, and is encouraging all credit union with assets above $40 million to consider how the proposal will affect their operations and to file a comment letter.