Nearly 75% of the U.S. House of Representatives signed a letter addressed to NCUA Board Chairman Debbie Matz that expressed concerns with the agency's proposed rule on risk-based capital.
The letter was written by Reps. Peter King (R-N.Y.) and Gregory Meeks (D-N.Y.), both members of the House Financial Services Committee, and was signed by 173 Republicans and 151 Democrats, according to CUNA.
Of the 60 members on the House Financial Services Committee, 49 signed the letter, including 23 of the 28 Democrat members and 36 of the 42 Republicans.
"The risk weightings include concentration-based weights which, at the higher levels, would be considerably higher than those applied under the Basel system for banks," the letter said. "We are concerned this portion of the proposal could unnecessarily hinder credit union lending to homeowners and small businesses."
The King-Meeks letter asked the agency to consider the costs of the rule's implementation.
"We encourage the board to 1) take into account the cost and burden of implementing new risk-based capital requirements beyond the current leverage ratio; 2) provide justification and more clarity as to why the proposed risk weights differ from those applied to other community financial institutions; and 3) give credit unions more time than the proposal's allotted 18 months to come into compliance after it is finalized," the letter said.
"We are concerned that the amount of time the board has proposed is much too short for credit unions to appropriately recalibrate their books without adversely impacting their service to their members," it also said.
The lawmakers strongly urged the NCUA to give credit unions and stakeholders more time to comment on the proposal as well as additional time for implementation of the final rule.
The letter also warned of the economic impact of the proposal.
"Because of credit unions' limited avenues for raising capital, it is likely this proposal would force them to charge higher lending and financial services fees, reduce dividend payments to members, and deter new depositors," the letter said. "Before proceeding with a final rule, we urge the NCUA to consider the economic impact and consequences of reduced liquidity and financing for families and small businesses."
Both NAFCU and CUNA praised Reps. King and Meeks for sending to the letter to the NCUA.
"CUNA supports risk-based capital, but not the way that NCUA has proposed it. The fact that so many members of Congress have added their voices of concern bolsters credit unions' views that this proposal must be changed significantly," CUNA President/CEO Bill Cheney said.
"We appreciate the leadership shown by Representatives King and Meeks, and their colleagues from both sides of the aisle, in expressing their concerns about NCUA's seriously flawed risk-based capital proposal," NAFCU president/CEO Dan Berger said. "The numbers speak volumes as to how invested Congress is in this issue. NCUA needs to get this right for all credit unions across the country."
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