NCUA Director of Examination & Insurance David M. Marquis covered key aspects of NCUA's Prompt Corrective Action (PCA) proposal for reform in Washington during the Women in Housing and Finance's (WHF) symposium on Capital Issues for Financial Institutions.
Marquis explained how reform of capital standards is vital for credit unions as other federal financial regulators explore implementation of BASEL II and other capital reforms for banks in the United States. The WHF symposium included sessions on Basel I, Basel II, Government Sponsored Enterprises, and CUs.
Marquis noted that while still maintaining a leverage ratio, NCUA's PCA reform proposal employs a more risk-based approach to credit union capital standards consistent with BASEL I and II. U.S. Reps. Ed Royce (R-CA) and Paul Kanjorski (D-PA) have included a risk-based PCA reform plan in the Credit Union Regulatory Improvements Act, recently introduced in Congress, which NCUA supports.
The proposed risk-based system uses risk portfolios and weights based on the BASEL II standard approach. Marquis emphasized that the proposed capital reforms for credit unions are designed to achieve and maintain comparability with FDIC insured institutions.
