NCUA Says No — Again — To RBC Comment Period Extension

WASHINGTON — CUNA and NAFCU recently asked NCUA — for a second time — to extend the comment period on the proposed risk-based capital rule another 90 days, and once again the agency said no.

NCUA turned down the trade groups' initial request for a 90-day extension, which was made in late February via a joint letter from NAFCU President and CEO Dan Berger and CUNA President and CEO Bill Cheney. The current deadline for comments to be submitted to the agency is May 28.

In the latest joint letter, dated April 17, Berger and Cheney recognized NCUA's refusal in March to grant an extension, noting, "We simply do not believe that the comment period provides sufficient time for a number of credit unions to analyze the proposal's impact on their individual operations and prepare their responses... Given the health of the credit union system, we do not see the need to rush this rule and believe more time for comments will also benefit the agency through the production of well-reasoned letters."

In a letter dated April 22, NCUA Chairman Debbie Matz told the trade associations that her reasons for turning down the first extension request have not changed, adding the "current comment period will be one of the longest in NCUA history."

In a March 5 letter to CUNA and NAFCU, Matz informed the trade associations that credit unions effectively will have a total of 120 days to comment because the proposal's publication was delayed in the Federal Register. The comment period begins from the date of publication. She also emphasized the importance of the rule, stating that if a strong risk-based capital rule "could have saved all credit unions from paying as much as they did to cover" failures that occurred during the recession.

Matz shared in her April 22 letter that NCUA is prepared to make changes to the proposal the agency concludes "are fundamentally sound and justifiable from a public policy perspective."

Cheney stated that the proposed rule is "one of the most significant ever for credit unions. For that reason I still believe credit unions deserve more time to consider all of the ways the proposal will affect them — and 90 days, or even 120, is just not enough."

NAFCU credited NCUA for spending a great deal of time in developing the rule, but continues to disagree that a comment period extension is not needed.

"NCUA has had an internal working group looking at the capital rule for more than two years," said Carrie Hunt, NAFCU SVP of government affairs and general counsel. "That speaks well of the agency's determination to draft a rule that will enhance the safety and soundness of the credit union industry. In fact, we think the agency would have benefited from a working group made up of credit unions prior to the rule being promulgated, and we suggested this on several occasions. Now we have this proposed rule, and we know that it will have a huge impact on the industry. We believe it is more than reasonable to ask for a bit more time to provide feedback."

NCUA's proposal would affect credit unions with $50 million or more in assets. NAFCU estimates these institutions would have to hold another $6.7 billion in reserves to maintain their current capital cushion, while CUNA sets the figure at $7.3 billion.