WASHINGTON — After reviewing the proposed new rule on risk-based capital introduced at Thursday's NCUA's board meeting, CUNA is not changing its stance that credit unions do not need reform that increases their capital burdens.
Pointing to how well credit unions, overall, performed and survived the recent economic downturn, CUNA President Bill Cheney said the trade association "does not think there is a credible case for increasing credit union capital requirements."
Under the
Those CUs with less than $50 million in assets will follow current capital rules, with the current 7% leverage capital standard remaining the floor.
Under the proposed rule, to be classified as "well capitalized," the impacted institutions must maintain a risk-based capital ratio of 10.5% or higher and pass a net-worth ratio as well as risk-based capital ratio requirements.
Adequately capitalized credit unions would be required to maintain risk-based capital ratios between 8% and 10.49% and pass ratio requirements. Undercapitalized institutions would fall under 8%.
"CUNA supports capital modernization — including risk-based net worth — but as part of a broader plan that considers appropriate leverage ratios and also access to supplemental capital," Cheney said.
CUNA stated that its Examination and Supervision Subcommittee has been meeting on this issue since May and will meet with NCUA Director of Examination and Insurance Larry Fazio soon.
The "bottom line," said Cheney, is "if our members agree that this proposal is needed, our primary objective in developing our position will be to ensure a final rule is narrowly tailored to minimize any negative effects on credit unions. We are particularly troubled by the section of the proposal that would allow NCUA to raise the risk-based capital requirement of an individual credit union above the normal threshold levels based on subjective factors."
