These three lawmakers even asked the NCUA to voluntarily undertake the study called for in their bill before the agency moved forward with finalizing its rule. (While NCUA Board Chairman Debbie Matz has indicated the agency will provide more information to Congress, it has failed to meet the spirit of the study and legislation by moving this rule forward.)

While the NCUA's latest actions run directly counter to the view held by a majority of the House Financial Services Committee, Congress can still pass the bill and require the NCUA to "stop and study" its final rule and report more information to Congress, including ideas for legislative capital reforms for credit unions. (In Thursday's vote on the rule, NCUA Board Member J. Mark McWatters was the only dissenting vote. He has been an outspoken critic of the NCUA's risk-based capital proposal and consistently opposed it.)

NAFCU has never opposed an RBC system, but it believes any such system must reflect lower capital requirements for lower-risk credit unions and higher capital requirements for higher-risk credit unions. The association also holds that the NCUA cannot accomplish this balanced system alone – Congress must be involved. This is where Chairman Matz and Vice Chairman Metsger have missed the mark in their comments at Thursday's board meeting. While it's true that the NCUA has been working on RBC regulations and studying credit union capital issues for a while, the agency has failed to provide legislative recommendations to Capitol Hill to reform our industry's capital system and create a true risk based capital regime – something that H.R. 2769 asks of the NCUA. 

The industry has already seen what kind of change is possible when credit union voices are united. Inundated with comments from credit unions, NAFCU and members of Congress on both proposals, the NCUA has finalized a rule that contains many changes sought by NAFCU and its members since it was first proposed in January 2014. Some of those victories in this final rule include:

• Removal of individual minimum capital requirements: The NCUA says it will rely on other supervisory authorities to address deficiencies in capital levels.
• Removal of interest rate risk from the RBC calculation: The NCUA has removed interest rate risk from its risk-based capital ratio. Further, the risk weight for investments in CUSOs is now 150%, down from the proposed 250%.
• Increase in the threshold for determining if a credit union is "complex": For the purposes of capital requirements, the threshold was raised from $50 million to $100 million in assets. However, NAFCU still has concerns with the NCUA's continued plan to define a "complex" credit union for RBC purposes solely based on asset size.
• Elimination of the 1.25% allowance for loan and lease losses cap: NAFCU said limiting ALLL to 1.25% of risk assets was too conservative considering upcoming rulemaking expected from the Financial Accounting Standards Board.  
• Revisions to a number of risk weights: Risk weights, including those for member business loans, CUSOs, corporate credit unions, real estate loans and investments, all underwent changes from the first proposal to the final rule. Basically, the final rule now recognizes that some business loans are riskier than others.
• A longer implementation period: The implementation date of Jan. 1, 2019, is more than twice the amount of implementation time provided in last year's proposal.

While NAFCU thanks the NCUA for its work and for hearing concerns raised on this issue, the association's concerns have not abated.

The industry has seen this rule change once, and NAFCU believes more changes need to be made on the legislative front. Legislative changes are necessary to bring about comprehensive capital reform for credit unions – reform that allows credit unions to have access to supplemental capital sources while making the statutory changes necessary to design a true risk-based capital system for credit unions.

NAFCU will continue to do whatever it takes on the legislative front to ensure that a fair, risk-based capital system is established for credit unions, and we encourage the NCUA to join us in that pursuit.

B. Dan Berger is president/CEO of NAFCU. He can be reached at 703-522-4770 or [email protected].