Matz Proposes Another Comment Period On NCUA's Revised Risk-Based Rule

ALEXANDRIA, Va. — After months of debate, NCUA Board Chairman Debbie Matz on Monday said she will request a revised risk-based capital rule be issued along with a new comment period "as a result of significant structural changes being considered."

Matz had been adamant during the agency's RBC "Listening Sessions" over the summer that NCUA was not required to issue a second comment period, despite repeated industry calls to do so.

"I have always said that another comment period would only be appropriate if we decide to make significant structural changes that would exceed the parameters of the Administrative Procedure Act," Matz said in a statement. "Even though the changes we are developing would pose less of a regulatory burden than the original proposal, some changes would affect the rule's structure. Based on discussions with NCUA's General Counsel, I now believe it is prudent under the APA to ask for additional comments."

Matz said she anticipates the Board could issue an amended proposal before the end of the year.

Immediately following Matz's statement, Board Vice Chairman Rick Metsger released a statement praising Matz "for her leadership and willingness to consider structural changes in the risk-based capital proposed rule, even if these structural changes resulted in an additional comment period."

"As I have often said, I believe interest rate risk is important and must be addressed in the risk-based capital rule, but it should be addressed separately from credit risk," Metsger said. "Weighting credit risk and interest rate risk with a single numerical value created conflicts that ultimately made it difficult to accurately weigh the risk of either.

At the NAFCU Congressional Caucus in Washington earlier this month, the vice chair told attendees he favored doubling the implementation period, which would create a de-facto second comment period on the rule.

Matz said that after listening to and reading comments to the proposed rule, the amended version will include a longer implementation period and revised risk weights for mortgages, investments, member business loans, credit union service organizations and corporate credit unions, among other changes.

In addition, credit union "stakeholders" will be invited to comment on an alternative approach for addressing interest rate risk using the supervisory process, according to Matz.

Newest NCUA Board Member Mark McWatters told CUNA officials earlier this month that a second comment period is needed on RBC and he would not vote on any proposal that did not include one.

McWatters issued his own statement Monday evening noting that he was “pleased” that Matz agreed to a new comment period.

“I will not consider the rules for adoption unless they are re-proposed with a robust comment period of not less than 60 to 90 days,” McWatters said. “I articulated this position out of respect for Congress and those members of the credit union community who have enthusiastically voiced their opposition to the proposed rules. That said, the previously proposed risk-based capital rules are deeply flawed and merit substantial revision. The devil is in the details, and I await the details before I can pass judgment on the next draft of the proposed rules.”