ALEXANDRIA, Va.—NCUA Board Member J. Mark McWatters said the NCUA does not have the authority to implement a two-tier risk-based capital system.
After the revised risk-based capital proposal was presented at the NCUA Board meeting on Thursday, McWatters said a one-tier system is more appropriate.
McWatters, who voted against the proposed rule, said the agency should have designated credit unions as complex only after an analysis of each credit union's portfolios. The revised proposal was approved by a 2-1 vote.
He referred to former House Speaker Newt Gingrich, who said Congress did not intend to allow higher risk-based capital requirements for well-capitalized credit unions than those that apply to adequately capitalized credit unions.
NCUA Board Member Rick Metsger said during the meeting the agency has the authority and an obligation to protect the safety and soundness of the industry.
"Reasonable people can disagree, but we wouldn't be moving this forward unless two of us believe we have the legal authority," NCUA Chairman Debbie Matz added.
Metsger also said the agency might have been too lenient in the revised proposal, particularly with the 3-year implementation period.
"If we do not have interest rate risk in here, I would question whether the implementation period is too long," Metsger said.
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