WASHINGTON NAFCU Friday called on NCUA to support a new regulatory relief bill introduced in Congress just hours before, which would, among other elements, create a risk-based capital system for credit unions.
“A regulatory capital system that takes into account the risks of assets, rather than one which does not, will provide a more accurate measurement of a credit union’s risk profile and safety and soundness,” said NAFCU President Fred Becker, in a letter to NCUA Board members Debbie Matz and Michael Fryzel. “As you know, this is not a novel concept for most other financial institutions; unfortunately, however, credit unions have been required to function under an outdated, inflexible and generally unhelpful system that fails to adequately differentiate risks associated with different assets.”
NCUA’s support of the bill, though not critical, is always considered a major boost among lawmakers, who generally trust the judgment of the federal regulator.
NCUA has previously supported a risk-based capital system for credit unions, noted Becker. “NAFCU calls on the NCUA to once again extend support to risk based capital for credit unions and the other changes contained in the legislation.”
The bill introduced Friday has several other provisions involving NCUA. It would: allow NCUA to grant federal credit unions a waiver to follow a state rule instead of a federal one in certain situations a reverse wild card provision; authorize NCUA to modify a Consumer Financial Protection Bureau rule affecting credit unions; establish a risk-based capital system for credit unions; and, require NCUA to conduct a study of the Central Liquidity Facility and make legislative recommendations for its modernization.
NCUA on Friday said it had not seen the bill yet so it is reserving judgment. “NCUA just received a copy of the bill as-filed, and we cannot comment before we have completed the normal internal process for legislation, where the appropriate agency departments review it and its effects on current policy,” John Fairbanks, chief spokesman for the agency, told Credit Union Journal Friday afternoon.
