If the NCUA's proposed risk-based capital rule had been in effect in 2009, 45 credit unions would have had downgrades in their capital classifications, according to a NAFCU analysis released Friday.
The trade group called the latest analysis "conservative" compared to an earlier estimate that said 155 credit unions would have been downgraded.
"NCUA estimates that 19 credit unions would be downgraded by second risk-based capital proposal today," NAFCU Director of Research and Chief Economist Curt Long said. "Yet, according to NAFCU's analysis, the real impact of second risk-based capital proposal can best be seen by examining its implications during a financial downturn, such as the recent crisis. Under RBC2, the number of credit unions downgraded more than doubles during a downturn in the business cycle."
Long, whose department conducted the analysis, said if the revised proposed RBC rule been in place during the crisis, "it would have made it harder for credit unions to have worked through the crisis, which they did without even having this rule."
NAFCU Vice President of Legislative Affairs Brad Thaler informed leaders on the Senate Banking and House Financial Services committees about the trade group's analysis of the revised risk-based capital proposal in a letter.
Carrie Hunt, NAFCU SVP of government affairs and general counsel, said the analysis demonstrated that the revised RBC proposal "represents a costly and unnecessary burden on well-capitalized institutions."
The Senate Banking Committee will hold a "Regulatory Relief for Community Banks and Credit Unions" hearing Feb. 10 with testimony from Larry Fazio, director of the NCUA's Office of Examination and Insurance.
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