Sitting in the ballroom of the InterContinental Hotel on Michigan Avenue in Chicago back in July, I sensed a lot of anger and fear as credit union leaders gathered to share their concerns about NCUA's proposed rule on risk-based capital. It was the second of three listening sessions the regulator hosted, and while other issues were also on the menu, RBC was clearly the main course. And it wasn't exactly going down well.
The tone of the dialogue was frequently tense and even downright combative at times. Credit unions weren't the only ones who were frustrated: so was NCUA Chairman Debbie Matz. And I can't blame her. Fielding many of the same questions over and over again, hearing many of the same concerns over and over again — particularly when those questions have been asked and answered multiple times — has to get old.
And when an answer is offered up as something intended to be good news — that NCUA is well aware many changes need to be made to the proposed rule and the agency already has every intention of making a lot of those changes — somehow gets turned on its head into bad news, well, that's got to be a little disconcerting, too.
During her initial remarks at that listening session, Matz sought to get a few things out of the way right off the bat: 1. NCUA is already planning on taking a very close look at the risk weights and CUs can expect to see those change (presumably in a positive way); 2. The whole point of a proposed rule is that it is just that: a proposal, a living document that the agency fully intends to amend before issuing a final rule; 3. The final rule will be just that: final — with no second comment period.
But credit union leaders in the room seized on points 1 and 2 as reasons against point 3. A number of members of the audience repeatedly said that the very fact the regulator already knows that the RBC rule will require a lot of changes is the reason a second comment period will be needed. Indeed, some have argued, the more changes that are made to the proposed rule, the more important it is that credit unions be given another chance to look at it and comment on it.
Still, Matz stood firm, taking the time to explain that the agency would only be required to reissue the rule for comment if the intent of the rule was significantly changed. While NCUA has said that there will be many changes to the rule, Matz made it clear that none of those changes will alter the intent of the rule. When (yet another) credit union leader stood up to call for a second comment period, Matz again noted that the agency is not required to do so, to which the CU executive said, "It would be nice if the agency simply did the right thing because it's the right thing to do, and not because it's required to."
It was a comment that did nothing to lighten the mood. Talking with some of the participants afterward, it was clear they felt as if NCUA was happy to hold listening sessions — but was largely turning a deaf ear to their concerns.
Slight Change in the Wind
But over the last month or so, there seems to have been a change — albeit only slight — in the wind. At NAFCU's Congressional Caucus, NCUA Board Member Rick Metsger stopped just short of supporting a second comment period on the regulation, while offering up a glimmer of hope that credit unions might still get a second bite at the RBC apple.
A longer implementation period — something Matz has long supported, as well — could give credit unions another opportunity to comment on the rule before it is actually implemented, if the effective date is put off long enough. Indeed, that is one of the reasons that Metsger suggested a three-year timeline for the rule.
That, in and of itself, was a positive development, even though both CUNA and NAFCU noted that such a de facto second comment period isn't the same as actually giving credit unions what they need: an official second comment period. The difference is not a minor technicality. Delaying the implementation of the bill for three years would give credit unions the opportunity to comment on it because once the bill is finalized, it automatically gets put into the three-year rolling review of all NCUA regulations. But the odds of changes being made to a final rule that hasn't actually been implemented yet aren't as good as changes being made to a revised rule that is being reissued for comment prior to being finalized.
Still, Metsger saying that he could "see the value" of giving credit unions another opportunity to comment — even if that opportunity comes after the rule has been finalized — was the first time anyone at NCUA has suggested that the notion of credit unions getting to comment on the rule again might actually have some merit.
I could be grasping at straws here, reading between the lines where there is nothing to read. But as one credit union director told Credit Union Journal after Metsger's address at the NAFCU event said, "Mr. Metsger did something that was better than the others: he at least listened to us."
It's not fair to say that no one else at NCUA has listened. But it's the first indication that the agency is actually hearing.
Editor's Note: The day this article went to press,
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