CUNA Notes Two Concerns On PCA Plan

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Saying it generally supports a plan by NCUA to seek changes in Prompt Corrective Action (PCA), CUNA last week expressed concerns over two elements of the plan.

NCUA has formally proposed changes in PCA that would include a reduction in the standard net worth ratio requirements for credit unions to a level comparable to what is required of FDIC-insured institutions, which is about two percentage points lower than currently required for credit unions.

In a letter to NCUA, CUNA CEO Dan Mica noted that while the agency's proposal doesn't require a write-down of the deposit credit unions have in the NCUSIF, he said the trade group wants to ensure that "the PCA proposal does not place the credit union system on a 'slippery slope' that might ultimately lead to the write-down of the NCUSIF deposit."

Separately, CUNA expressed concerns over the delegation of authority to regional offices, Basel II, and secondary capital for low-income credit unions.

CUNA wants any delegation of authority to regional offices to be accompanied by appropriate safeguards--such as "limiting to the regional director only the authority to downgrade a net worth category and requiring the regional director to consult formally with the NCUA executive director before such a step could be taken."

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