NCUA and Congress racing to see who can delay RBC first

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It’s looking more and more like the National Credit Union Administration’s controversial risk-based capital rule will not go into effect in 2019 as planned. What’s less sure is whether that will take place in 2019, 2020 or at all.

A measure to delay implementation until 2021 had already been included in several pieces of House legislation, including the JOBS 3.0 Act, but on Friday word came out that NCUA itself would consider a one-year delay when the regulator’s board holds its monthly open board meeting later this week.

Credit union trade groups have welcomed the news.

“The NCUA’s proposed delay and reconsideration is incredibly positive, and NAFCU looks forward to a right-sized rule for credit unions,” Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions, said in a statement.

Even if NCUA does elect to move ahead with a delay, Congress could still extend implementation further – and any legislation would still have to move through the Senate, which could give NCUA enough time to pass its own delay or revise the rule altogether.

“We view this as a dualistic approach. The chances are similar whether NCUA acts first or the Senate moves,” said Ryan Donovan, chief advocacy officer with the Credit Union National Association, adding that if the board does revise the RBC rule it might wait until former board member Rodney Hood is confirmed to rejoin the board, replacing outgoing member Rick Metsger.

At least one analyst says there’s reason for credit unions to hope for more than just a one-year delay.

“There is motion on the Senate side – I hope that means there’s progress,” opined John McKechnie, a former NCUA and CUNA staffer and now a partner at Total Spectrum in Washington. He noted that Senate Majority Leader Mitch McConnell has “said the House bill will be considered, so that’s a reason for hope. Given the expected addition of at least one new NCUA Board member in the coming months, it’s logical to consider a delay of this complex and important rule. ”

As for NCUA, said McKechnie, there’s “probably too much” speculation at this point about how the board will move forward.

“Credit unions have a right to be interested in the outcome, but should also let this process play out and let the board do its work,” he added.

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