NAFCU Senior Vice President of Governmental Affairs Dan Berger pointed out in his letter that NCUA's recommendations "reflect the fact that meaningful capital standards are necessary in order to safeguard the federal insurance fund, taxpayers, and the nation's credit union system. However, unlike the cookie-cutter approach to risk underlying the initial implementation of PCA in 1998, the package of provisions outlined below would allow NCUA to develop a more fully risk-based system for credit unions that would involve both complimentary leverage as well as risk-based standards." He emphasized, "These proposed changes are similar to the capital standards now applicable to FDIC-insured institutions."

NCUA reported to Congress in 2005, the letter noted, that the current system with regard to Prompt Corrective Act is "too inflexible and that a more fully risk-based system would both foster healthy capitalization levels and encourage more effective capital management," CUNA President/CEO Dan Mica wrote to the senators.

However, CUNA listed the expansion of member business lending powers as its "top regulatory relief priority." Mica asserted, "When Congress initially imposed these limits, there was a recognition that the cap would be examined in the future."

NAFCU also listed the increase of the member business lending cap from its current 12.25% of assets as a priority. Both CUNA and NAFCU supported a 20% cap as is included in CURIA.

"The new cap would still be equal to or stricter than business lending caps imposed on other depository institutions and," Mica wrote, "as the 2001 Treasury report found, '…the credit risk associated with member business loans may be less than that for most bank and thrift commercial loans.'"

Both groups also recommended increasing the floor for reported "business loans" from $50,000 to $100,000. CUNA went further to ask for an exemption of loans and loan participations for nonprofit religious organizations from the cap as well as member business loans and participation in underserved areas.

Finally, NCUA, CUNA and NAFCU all requested that Congress clarify the ability of all federal credit unions to adopt underserved areas. CUNA threw the American Bankers Association's legal challenge to NCUA interpretation of the Credit Union Membership Access Act, which was supported by the bill's sponsors, in the face of Congress, stating that "Congressional intent…has been undermined now that only multiple group credit unions are eligible to expand credit union services to areas with high unemployment and below median income that have traditionally been underserved by other traditional depository institutions."

"These improvements would accomplish several objectives," Johnson concluded. "They would allow all federal credit unions charter types to add underserved areas to a credit union's field of membership, eliminate duplicative and superfluous regulatory requirements regarding NCUA Board's ability to define the underserved area and add additional service requirements, refines the employment of census track data in making a determination about an underserved area, and codifies the requirement that a branch or service facility must be established in the underserved area within two years."

Berger added, "We also believe it is important to clarify the definition of underserved area as part of this provision to permit an area to qualify either under the current criteria for an 'investment area' under CDFI Act, or as a 'low income community' under the New Market Tax Credit program."

CUNA Vice President of Legislative Affairs Ryan Donovan cautioned that this is the "very beginning of a process." He added, "We've been meeting with many senate staff over the last several months and we will continue to do so and we will engage this process that they're moving forward with in the Senate."

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