ALEXANDRIA, Va. (8/18/14)--In response to an Aug. 1 letter from Rep. Jim Bridenstine (R-Okla.), National Credit Union Administration Chair Debbie Matz noted the goal of the agency's risk-based capital (RBC) proposal.
"With the proposed rule, our goal is to ensure that those federally insured credit unions that have a higher appetite for risk hold enough capital to match that risk," Matz wrote in her Aug. 14 response. "In other words, the proposal seeks to scale the capital requirement based on an individual credit union's balance sheet risks."
Bridenstine's letter read, "NCUA examiners already have the ability to mitigate concentration risk through other regulatory actions, it appears that the inclusion of concentration risk as a part of the calculation of capital rules could be redundant and place credit unions at a competitive disadvantage relative to other insured depository institutions."
Matz also identified the five candidates for revised risk weights--in part due to input from comment letters and the three Listening Sessions.
"They include the risk weights for investments, mortgages, and member business loans, as well as credit union service organizations and corporates.
"The final rule will make appropriate changes in each of these areas to ensure that credit unions continue to make safe investments and provide sound loans to homeowners, member small businesses, family farms, and consumers, including those in Oklahoma," Matz wrote.
The Credit Union National Association has advocated that the NCUA withdraw the proposal and instead pursue RBC standards as part of a multifaceted capital reform strategy. CUNA has expressed concerns with the proposal's interest rate risk scheme, risk weights and implementation period should the rule prevail.