WASHINGTON (4/20/15)--CUNA submitted its
Friday on the National Credit union Administration's revised risk-based capital plan (RBC2). While holding firm to the view that the rule is unnecessary and should be tabled, the letter offers a number of constructive suggestions to improve the rule since the agency appears determined to move forward.
"I've said it before. I will keep saying this. A risk-based capital rule is a solution in search of a problem. What's more, the current plan--though vastly improved from the original--is a solution that just won't work in search of a problem that just does not exist," CUNA President/CEO Jim Nussle said.
He added, "To the more than 1,200 of you that have already filed a comment letter, I thank you for participating in this important effort to improve the rule. For those who have not yet written, I encourage you to do so."
CUNA has created a
body of resources
to support credit unions' RBC
and has produced the video below describing key points of its 15-page comment letter.
Among the points made in the trade association's letter, Nussle emphasizes that the proposal, as well as other recent NCUA initiatives, goes way too far in treating credit unions like banks: It ignores the importance of the credit union difference as cooperative, not-for-profit, member-owned and directed institutions.
"There is a real danger," he warns, "that if you are regulated and supervised as banks, you will be forced to act more like banks, which would be a great disservice to your members."
Among other top points in Nussle's letter:
- CUNA holds hold firm to its view that NCUA does not have the legal authority to impose a two-tiered RBC system.
- The strong performance of credit unions and their federally backed share insurance fund during and after the financial crisis demonstrates there is no need for a major overhaul of NCUA capital requirements, and CUNA finds no evidence that had RBC2 been in place before the crisis that it would have reduced National Credit Union Share Insurance Fund losses in any noticeable way;
- CUNA therefore requests that the rule be withdrawn, but in the event the NCUA moves forward, the association urges a number of changes and further improvements;
- The new proposed capital adequacy provisions, beyond net worth and RBC ratio requirements, should be dropped;
- A number of the risk weights should be reduced;
- The identification of "complex" credit unions should be based on something more than simply asset size, and should include only credit unions of at least $500 million in assets;
- The conditions under which goodwill could be included in the RBC ratio should be expanded;
- The NCUA should minimize the burden on credit unions of expanding the Call Report for purposes of RBC2;
- The agency should allow credit unions to use supplemental capital in meeting RBC requirements;
- A separate interest-rate risk rule is NOT necessary; and,
- The implementation of RBC2 should be delayed until 2021, to coincide with expected refunds from the Corporate Stabilization Fund.
"We listened to our members in developing this
. We heard from CUNA's Governmental Affairs Committee and its Examination and Supervision Subcommittee, from members of CUNA's CFO Council, from many credit union CEOs and volunteers, and from leagues.
"Their input was vital in shaping our response and I urge the NCUA to consider our recommendations carefully," Nussle said.