WASHINGTON – Congress should thoroughly examine NCUA’s proposed risk-based capital (RBC) rule and direct the agency to make significant changes to address serious deficiencies in the regulation, CUNA said in a letter to House Financial Services Committee leaders.
The letter was sent to Committee Chairman Jeb Hensarling (R-Texas) and Ranking Member Maxine Waters (D-Calif.) ahead of a planned Tuesday hearing on regulatory red tape. General counsels from federal financial institution regulatory agencies, including NCUA and the CFPB, are expected to speak during that hearing.
Concerns raised in the letter to Congress include:
The rule is fundamentally flawed. For example, it would increase by $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—and, in some cases, more stringent than what banks face under Basel III;
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; and
The time period for implementation is unreasonably short at 18 months.
CUNA in the letter also commented on recent CFPB rules, noting that the agency in every case should target the bad actors in the financial services market, not force out the good actors. Credit unions should be exempted from CFPB rulemakings, unless there is a record of abusive practices by credit unions on the issue being addressed, CUNA has repeatedly emphasized.
CUNA and the state leagues are encouraging all credit unions to file comments letters before the May 28 deadline. A free RBC Webinar and other resources are available here.
Assistance with individual comments letters is available from NJCUL Director of Compliance Nicola Foggie at 800-792-8861, ext. 112 or firstname.lastname@example.org.