WASHINGTON The recent swearing in of Richard Metsger to the NCUA Board puts the helm of the agency back up to its full complement of three board members just in time for the regulator to tackle a host of critical issues, including everything from its derivatives proposal and the agency’s budget to CUSO oversight and risk-based net worth.
Following Richard Metsger’s first official statement as a member of the NCUA Board, in which Metsger said his primary focus would be protecting the NCUSIF, CUNA said the former Portland Teachers CU volunteer is off to a good start. With a number of high-priority items before the federal regulator right now, CUNA SVP Regulatory Advocacy and Deputy General Counsel Mary Dunn said that having a third board member at NCUA is “really critical.”
The three-member panel had been down to just two members for some time, and the possibility of it dwindling down to just one person could have been problematic, particularly as it seeks to iron out some potentially tricky and important issues. Among the hot topics CUNA is eager to discuss with Metsger as well as NCUA Chairman Debbie Matz and Board Member Michael Fryzel are the agency’s proposed rules on derivatives and CUSO oversight, as well as emergency liquidity and NCUA’s budget. “There are a lot of key issues to discuss when we meet with each of the board members in September,” Dunn related, not the least of which is the risk-based net worth proposal.
“The chief driving principle [for CUNA] is that the board not adopt a new approach to net worth that simply adds on a risk-based component in addition to the existing rule,” Dunn said.
CUNA Chief Economist Bill Hampel agreed, noting that even without an additional risk-based component, credit unions’ capital requirements are a good two points higher than that of banks, and the vast majority of credit unions are either well capitalized or over capitalized. “You wouldn’t need your toes” to count the number of credit unions in trouble, Hampel noted, suggesting that adding a risk-based component on top of the existing system is unnecessary.
But CUNA is not against going to a risk-based net worth approach, so long as it replaces the existing system, rather than being added to it, Dunn and Hampel explained. Though NCUA has not indicated that it plans to add the risk-based system to the existing method, Dunn said that “from comments we have heard, we think that could be where they are going.”
Still another issue on CUNA’s regulatory dashboard: the Consumer Financial Protection Bureau’s supervisory highlights. “We always review this in great detail in case NCUA uses it as a template” for its own consumer protection efforts, Dunn explained. CFPB’s most recent supervisory highlight document focused on mortgage servicing issues, including sloppy account transfers that do not provide the level of relief consumers should have, Dunn noted.
