WASHINGTON—Another letter from Washington addressing the risk-based capital proposal landed on NCUA's desk Monday, and this time it came with a deadline.
The House Financial Services Subcommittee on Oversight and Investigations Chairman Patrick McHenry (R-N.C.), asked NCUA Board Chairman Debbie Matz to
McHenry asked for any cost-benefit analysis performed by NCUA, metrics used to determine what asset classifications required revision and justification for revised weighting associated with each individual asset class.
The letter also addressed a major concern of credit unions—that examiners may arbitrarily set a CU's capital requirement, regardless of what the new capital rule states.
McHenry asked NCUA to provide "an explanation of the extent to which examiners would be empowered to assess and make capital recommendations to credit unions that might deviate from the new risk-based capital standards."
NCUA Chairman Debbie Matz has stated that it was never the agency's intent to give "arbitrary authority" to examiners.
"Perhaps we did not write [the proposal] as clearly as we should have," she told Credit Union Journal in a previous report. "Our intent was that if the examiner feels a credit union should hold more capital above and beyond what is required in the rule, they would have to go to their supervisory examiner, who would have to go to their regional director, who would then have to come to the board. Many steps would have to be worked through and, ultimately, the board makes the final determination."
McHenry also wrote in his letter that the "breadth and scope" of the proposal makes the implementation stage "critical. As a matter of fairness and transparency, the public deserves the opportunity to understand the logic behind the proposal."
NAFCU, in a story on its website, assessed Monday's letter, saying such "formal requests" may signal hearings in Washington over the risk based capital proposal are coming.
Brad Thaler, NAFCU VP of legislative affairs, said, "Chairman McHenry's letter shows that there is ongoing concern on Capitol Hill regarding risk-based capital and that there are questions that have as yet, not been addressed by NCUA. NCUA has indicated a willingness to make changes to its proposal and we hope NCUA will listen to the concerns, comments and questions from lawmakers and credit unions and put a new plan out for public review."
Last month the House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Rep. Shelley Moore Capito (R-W.Va.), chairman of the House Financial Services subcommittee on financial institutions and consumer credit,
Leaders of the Senate Banking Committee, as well as the Center for Capital Markets Competitiveness, sent letters to NCUA in June regarding the risk-based capital rule. NCUA also received a letter on this topic that was signed by more than 320 members of the House of Representatives.
