WASHINGTON–NCUA Chairman Debbie Matz has sent a letter to the House Financial Services Committee regarding HR 2769, the Risk-Based Capital Study Act of 2015 that is better known as the “Stop & Study” bill and which is to be the subject of committee mark-up today.
That legislation would require NCUA to review its second risk-based capital proposal and report back to Congress on the agency’s authority to issue a two-tier, risk-based capital rule and the impact the rule would have on credit unions and their members. The bill was introduced by Reps. Stephen Fincher (R-TN), Denny Heck (D-WA), and Bill Posey (R-FL). It has the backing of both NAFCU and CUNA.
In the letter, Matz notes the Federal Credit Union Act’s requirements for a risk-based capital rule comparable to banks, the fact that the agency has studied the issue since 2011, and that the rule has not been updated in 15 years. Matz also cites recommendations from GAO and the agency’s IG, and changes in regulation and the nature of the financial system.
Matz called the legislation a “redundant study of matters previously examined as part of an already lengthy rulemaking process,” and notes the NCUA board has “made significant changes and issued a revised proposed rule in January 2015.”
“In response to stakeholder comments, the scope of the revised proposed rule was significantly narrowed by redefining ‘complex’ to federally insured credit unions with more than $100-million in assets. As a result of the increase in the threshold, the revised proposed rule exempts 78% of federally insured credit unions.”
Matz further told Congress that also as requested by commenters, the NCUA board has made significant changes to the risk weights for investments, real estate loans, MBLs, and CUSO.
The chairman concluded by stating “this targeted rulemaking is essential to safeguard the credit union system and protect the Share Insurance Fund from future losses.”
CUToday.info has a copy of the full letter as well as a copy of the agency’s Risk-Based Capital Proposal Impact Summary in The Gov.