WASHINGTON (5/23/14)--With only three business days left in the comment period for the National Credit Union Administration's risk-based capital (RBC) proposal, almost 900 comment letters already have been sent. In addition to the King-Meeks letter signed by 324 members of Congress, Sen. Al Franken (D-Minn.) submitted a letter last week, and former Senate Banking Committee Chair Al D'Amato has commented as well.
Sen. Heidi Heitkamp (D-N.D.), a member of the Senate Banking Committee, submitted a comment letter of her own Thursday, urging the NCUA board to commit to transparency during the process and incorporate feedback from industry participants.
"Credit unions have served farmers and ranchers for many years, by making safe and affordable agricultural loans," she wrote. "Several North Dakota agricultural groups are concerned the proposal risk-based capital rule will negatively affect agricultural lending in my state."
A letter signed by members of five different North Dakota-based agricultural organization also cautioned against the effects of changes to current RBC rules.
"It is because of this history of safe and sound loans that Congress created an exemption for rural based credit unions so that they would not be subject to the 12.25% cap on business lending," the letter reads. "If the RBC rule were to be finalized as proposed, this exemption would become moot and many credit unions may have to discontinue or decrease agricultural lending."
State credit union leagues, credit unions and other stakeholders have also contributed to the nearly 900 comment letters received by the NCUA, including the following:
- Joshua Roberts, controller and compliance officer, Enterprise CU, Brookfield, Wis., with $28 million in assets.: "Every credit union's balance sheet varies dramatically, and while some loans may have a higher inherent risk than others, certain considerations should be made, such as a credit union's low-income designation, opportunities to provide loans to lower rated paper, and assisting with credit building lending. Being held to this standard could result in these credit unions potentially not providing these lending products which are vital to the communities they serve."
- Mary Zillman, Brokaw CU, Weston, Wis., with $46 million in assets: "I am mystified as to why this rule needs to be imposed. We've offered many of these products for years, and have just weathered one of the most troubling times of our days. What is really driving this proposal?"
- Jacki Lerdal, vice president/manager, Power Co-op Employees CU, Humboldt, Iowa, with $28 million in assets: "Credit unions must know the standard they're managing to in terms of capital. Allowing subjective authority to examiners in the field to arbitrarily establish capital guidelines higher than proposed guidelines eliminates that standard. Including such a provision creates uncertainty and difficulty for our staff and board and prevents us from effectively managing the financial institution on behalf of our members."
- Martin R. Carter, CEO, Parkside CU, Livonia, Mich., with $76 million in assets: "While the FDIC fund became technically insolvent during each of the last two financial crises, the NCUSIF has performed very well under current PCA rules. I believe this NCUA proposal is misguided from the outset because it builds additional layers on top of already existing statutory standards that in many areas are more stringent than the Basel system for small banks. Credit unions are already highly regulated and restricted. The current leverage requirement of a 7% net worth ratio in order to be considered "well capitalized" is 40% higher than the comparable requirement on community banks ..."
To read more of Carter's comments, as well as a sampling of other comments received by the NCUA, use the resource link.