WASHINGTON — As NCUA sifts through more than 2,000 comment letters on the risk-based capital proposal, CUNA and NAFCU hope the agency pays close attention to a letter the regulator received Wednesday from leaders of the Senate Banking Committee.
The joint letter from Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho) addressed concerns aligned with those held by both trade organizations.
The senators urge NCUA to finalize rules that are "clear, well-calibrated, and work effectively with other prudential requirements to ensure that there are no unintended consequences."
The letter points to how the risk-based capital rule's risk weights could negatively impact credit unions that make agricultural loans, something the legislators fear could harm many constituents in their states.
"Credit unions play an important part in providing credit to rural communities in states like South Dakota and Idaho, and a decrease in their ability to lend could be detrimental to these communities," wrote Johnson and Crapo.
The senators also expressed concern for the proposal making it difficult for some credit unions to maintain their current capital classification and capital cushions. The letter addresses the wide gap between NCUA's estimates on the capital costs to CUs from the proposal ($700 million) and the trade associations' projected price tag (about $7 billion).
"Raising that amount of capital will require substantial time and careful planning by the affected credit unions, and may reduce availability of credit in many communities," the legislators wrote. "Because of the important role credit unions play in communities across the country, we ask that these concerns are taken seriously, and addressed in the final rule... While it is important to get the new capital standards in place, it is as important to get the rules right."
Trades Thank Senators
Outgoing CUNA President and CEO Bill Cheney thanked Johnson and Crapo for "speaking out on these important issues for credit unions. The concerns of these senators, the leaders on both sides of the aisle on our committee of jurisdiction in the Senate, must be addressed. CUNA supports risk-based capital but does not support it in this manner, which is why we continue to urge NCUA to withdraw their proposal."
Cheney departs June 11 to become president and CEO of $10.2 billion-asset SchoolsFirst FCU in Santa Ana, Calif. Bill Hampel, SVP of research and policy analysis and chief economist will step in as CUNA's interim chief.
NAFCU President Dan Berger also thanked Crapo and Johnson for their support "on this critical issue. The potentially devastating impact of the risk-based capital rule cannot be overestimated. We hope NCUA will heed the avalanche of concerns raised by both in the industry and on the Hill should they decide to move forward."
The comment period for the risk-based capital proposal closed May 28. NCUA is still counting the letters, with the number at 2,000-plus — the most ever received on a single proposal. The previous record was set in 1995 when the regulator received 1,300 comments on the corporate CU rule.
