WASHINGTON (4/8/14)--Addressing a group of about 60 Washington, D.C.-area credit union executives and officials Monday evening, Credit Union National Association Chief Economist Bill Hampel explained the National Credit Union Administration's proposed risk-based capital rule to the group.
CUNA's Bill Hampel discusses details of the NCUA proposal on risk-based capital with a participant at Monday's Metropolitan Credit Union Management Association meeting in Arlington, Va. Hampel explained the proposal, CUNA's concerns about it, and urged the group to comment on the proposal. (CUNA Photo)
Addressing the Metropolitan Credit Union Management Association's monthly meeting, Hampel noted CUNA's concerns with the proposal and strongly urged the credit union representatives to file comment letters urging the agency to make changes.
He urged his audience to share those comment letters with their representatives in Congress, as well as with CUNA and their credit union league.
CUNA has called the NCUA proposal fundamentally flawed. For example, it would increase by a total of $7.3 billion the amount of capital credit unions would be required to hold to be "well capitalized" through the imposition of asset risk-weightings that are poorly calibrated.
Because of the poorly designed risk-weights, the proposed rule would have a significant, adverse impact on credit unions' ability to serve their members, particularly through mortgage lending and small business loans. Also, CUNA maintains that the time period for implementation is unreasonably short at 18 months.
"It's really important that NCUA hears from you on this. If they hear from enough of us, I think there is a really good chance that they will revise this substantially before it becomes final," Hampel said.
Hampel said he bases that assessment, in part, on how the agency significantly modified its final rule on credit union derivatives use to reflect industry concerns expressed in CUNA's and credit unions' comment letters.
He added that when the NCUA proposed the RBC, on the same day it approved the final derivatives rule, the agency itself called attention to the changes it made in the derivatives final.
Hampel noted that CUNA has created a Risk Based Capital Action Center on its website that, in part, help credit unions both calculate the impact of the RBC plan on their operations and supports comment letter writing efforts.