On Sept. 30, NCUA Board Chairman Debbie Matz announced she will offer a second comment period for the proposed risk-based capital rule, due to the significant structural changes currently being considered.
“I have always said that another comment period would only be appropriate if we decide to make significant structural changes that would exceed the parameters of the Administrative Procedure Act,” Matz said in a statement. “Even though the changes we are developing would pose less of a regulatory burden than the original proposal, some changes would affect the rule's structure. Based on discussions with NCUA's General Counsel, I now believe it is prudent under the APA to ask for additional comments.”
Matz also said the revised proposal will include a longer implementation period as well as different risk weights for mortgages, investments, member business loans, CUSOs and corporate credit unions, as well as other changes.
NCUA Board Member Rick Metsger said the board is moving toward separating interest rate risk and credit risk in the proposal, which would warrant a second comment period.
“As I have often said, I believe interest rate risk is important and must be addressed in the risk-based capital rule, but it should be addressed separately from credit risk. Weighting credit risk and interest rate risk with a single numerical value created conflicts that ultimately made it difficult to accurately weigh the risk of either,” Metsger said.
“I am pleased we appear to be moving in the direction of separating interest rate risk and credit risk and that structural change alone is sufficient for me to believe an additional comment period would be appropriate,” he added.
According to Matz, the NCUA Board might present the amended risk-based capital proposal before the end of the year. Metsger said the revised proposal has not been drafted yet.
“I believe that when people do review it, they will conclude that we have both listened to—and heard—the comments that were submitted during the initial comment period. Those who weighed in thoughtfully on the original proposal will see the agency has been responsive to fact-based analysis,” Metsger said.
Board Member Mark McWatters did not comment on the decision.
Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.
Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking credit union news and analysis, on-site and via our newsletters and custom alerts
- Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
