Week ahead: RBC, cybersecurity and a lifeline for Senate Dems

Credit unions start the week off with some clarity on the National Credit Union Administration’s risk-based capital rule…for now, at least.

NCUA on Thursday approved changes to the rule and delayed implementation until Jan. 1, 2020. But the National Association of Federally-Insured Credit Unions once again called on lawmakers to push that date back to 2021 through a bill that has passed the House but has not been taken up in the Senate.

Brad Thaler, NAFCU’s vice president of legislative affairs, wrote in a letter last week to the Senate Banking and House Financial Services committees that while the delay provides some immediate relief, pushing implementation back until 2021 would “ensure that NCUA has additional time to reexamine specific issues with the RBC rule and its potential negative impacts on credit unions.”

With the details of RBC mostly settled, NCUA officials have said that the agency is working on another capital proposal. This one would allow more credit unions access to secondary capital. That earned praise from the National Association of State Credit Union Supervisors.

Bloomberg News

“We have long held that alternative capital should be a part of the risk-based capital framework because it could help protect the [National Credit Union Share Insurance Fund] from losses by encouraging credit unions to attract additional loss-absorbing forms of capital that they would otherwise forgo,” the trade group wrote.

As Credit Union Journal has reported, banking trade groups have largely stayed out of the fight surrounding risk-based capital, but any moves the regulator makes on alternative capital are likely to raise the ire of the American Bankers Association and Independent Community Bankers of America.

Chorus grows against third-party oversight

A former NCUA board member criticized the agency for its recent push for oversight of third-party vendors, citing cybersecurity concerns. Geoff Bacino, writing in his weekly "Bacino Report" email column, said this week that the current board has not adequately explained what it brings to the table that will justify the additional costs and labor the change would require.

“The increased cost would most likely be due to the need for NCUA to hire the expertise that may not be on staff at this time,” Bacino wrote. “Cybersecurity was the top reason that NCUA gave for asking for third-party authority. With the Departments of Justice, Homeland Security, the Secret Service and even the Federal Trade Commission already concentrating on the cybersecurity issue, what can NCUA add to the mix? The fact that the [Federal Deposit Insurance Corp.] and the [Office of the Comptroller of the Currency] have this authority weakens the NCUA argument since the banking agencies are required to share their reports.”

Some credit unions are reporting NCUA has already significantly increased the amount of attention paid to cybersecurity matters during exams. A recent NAFCU survey showed 27 percent of examiners’ time at credit unions this year has been focused on cybersecurity, compared to just 17 percent last year. Many CUs say their own IT compliance staff have nearly doubled since 2010.

Help for struggling Dems?

With midterm elections just two weeks away, consumers in states like Indiana, Montana, West Virginia and elsewhere are set to begin seeing ads for candidates supported by the Credit Union National Association – and it could help Democrats retake the Senate.

CUNA last week announced more than $1 million in independent expenditures targeting a number of House and Senate members – most notably U.S. Sens. Joe Donnelly, D-Ind., Jon Tester, D-Mont., Joe Manchin, D-W. Va., and Claire McCaskill, D-Mo. All four are red-state Democrats in tight reelection battles whose survival will play a key role in whether or not Democrats can flip the Senate.

A number of Republicans are also receiving CUNA support, including U.S. Rep. Steve Chabot, R-Ohio, Pete Sessions, R-Texas, Peter Roskam, R-Ill., and Bruce Poliquin, R-Maine.

CUNA and other credit union trade groups regularly support candidates on both sides of the aisle. While spending during election cycles may favor one party slightly over the other, the industry as a whole splits its PAC giving fairly evenly.

“Our strategic approach involves supporting credit union champions, regardless of their political affiliation, who understand issues affecting the industry and support policies that help credit unions serve their members,” Trey Hawkins, CUNA’s deputy chief advocacy officer for political action, said in a statement last week.

Independent expenditures are made separately from an individual candidate’s campaign but can be spent in an unlimited fashion from each organization’s political action committee – in this case, the Credit Union Legislative Action Committee.