NEW ORLEANS–NCUA Board Member Mark McWatters said he believes the agency should not wait until 2019 to issue a rule on supplemental capital.
NCUA “should have something on the books today,” McWatters told attendees at NASCUS’ State System Summit here.
“When I first came on to the NCUA Board, I was surprised there wasn't a robust way already on the books to raise supplemental capital,” McWatters said.
McWatters said he hoped that a proposal on the issue would be issued by NCUA “within the next two to three months.” He added that he would be looking for a final rule for supplemental capital that is “simple, works in the marketplace and is transparent.”
NCUA Chairman Debbie Matz indicated during the most recent board meeting that supplemental capital will be a priority now that the risk-based capital proposal has been finalized.
In other comments, McWatters said it was “important” that the overhead transfer rate (OTR) be subjected to public notice and comment.
“It’s a legal construct; I'm astonished it has not been put out for comment in the past,” said McWatters, who is an attorney.
He urged all stakeholders -- regulators, credit unions and others – to weigh in on the OTR when it comes up for comment. He warned, however, that if the comment proposal is not compliant with the Administrative Procedure Act, which governs federal rule making procedures, “I cannot support it.”
Regarding the new risk-based capital rule, McWatters repeated the statement he made during the board meeting that he believes the final rule is “illegal,” and indicated that time would determine the new rule’s ultimate disposition. “A future, new NCUA board may take a different view (than the current board)” with respect to the legality and approach of the new rule, he said.
He also cited the letter sent to Matz by House Financial Services Committee Chairman Jeb Hensarling (R-TX). In that letter, sent in advance of the board’s approval of the final rule last week and read into the record during the meeting, Hensarling urged the NCUA chairman to hold off on taking action. Nevertheless, the board moved forward on the rule, which McWatters termed “defiance.”
“We’ll see what happens there,” McWatters commented.