WASHINGTON (2/14/14, UPDATED 2:28 p.m. ET)--Public hearings on the National Credit Union Administration's risk-based capital proposal have been called for by the Credit Union National Association, as the association urged the regulator to address credit unions' "deep-seated concerns" in an interactive setting.
In a letter today to NCUA board members, CUNA President/CEO Bill Cheney wrote that hearings would produce an official record of discussions between credit unions and NCUA leadership that, in addition to comment letters, the NCUA board could rely upon to determine the best path for proceeding on the rule.
The CUNA leader noted to the federal regulators that CUNA is "dissecting the agency's stated legal basis for the proposal," and reviewing a January 2012 Government Accountability Office report on the NCUA's use of Prompt Corrective Action.
In addition, Cheney wrote that CUNA is thoroughly assessing the impact and costs of the proposed risk-based capital rule to the credit union system. CUNA is comparing the NCUA plan to key provisions of Basel III, the global, regulatory standard that will be implemented for banks through March 31, 2018 on capital adequacy, stress testing and market liquidity risks.
"We are objectively considering the extent to which a number of key changes to the proposal would result in an improved outcome for credit unions and minimize any detrimental impact that the proposal would otherwise impose," Cheney said.
CUNA continues to urge credit unions to find out as much as possible about the proposal and to send a comment to NCUA within the 90-day comment period provided. (The due date for comments will be set once the proposal is printed in the Federal Register, which has not occurred as of this writing. Watch CUNA'sNews Now for updates.)
CUNA estimates that the risk-based capital proposal carries with it a multi-billion dollar price tag for credit unions--perhaps prompting as much as $7.3 billion in more capital to retain current margins.
What is most concerning about the impact, Cheney points out, is that it would occur despite the fact the current system showed its strength by withstanding the worst financial crisis in 80 years.