NCUA Risk-Based Capital Delay Attached to Foreign Investment Bill
Credit unions have said complying with the rules could cause them to curtail certain services to members.
The House Financial Services Committee is scheduled to mark up legislation updating the Committee on Foreign Investment in the United States (CFIUS), a priority for many legislators on May 22. Defense Secretary James Mattis has suggested that Congress should include CFIUS legislation in the annual defense authorization bill.
The risk-based capital rule is scheduled to go into effect on Jan 1, 2019; the legislation would push that date to Jan. 1, 2021.
The rule was adopted while Democrats held the majority on the NCUA board and before it was adopted, House Financial Services Chairman Jeb Hensarling (R-Texas), asked that the board delay the plan.
The board passed the rule anyway.
Current NCUA Board Chairman J. Mark McWatters, a former Hensarling staffer, has said he is willing to revisit the rule.
However, board member Rick Metsger has said the financial problems plaguing credit unions that have made loans based of taxicab medallions point out the need for such rules.
Credit unions have said that complying with the rules could cause them to curtail certain services to members.
The Financial Services panel has approved stand-alone legislation to delay the rule, but that bill has not gone to the House floor. The House also included a risk-based capital provision in Hensarling’s Financial CHOICE Act, which passed the House.
However, S. 2155, the Senate financial regulatory overhaul measure does not include the capital rule.
And supporters of the delay could face an uphill battle, since Senate CFIUS legislation does not include a provision delaying the risk-based capital rule. The Senate Banking Committee also is scheduled to consider its CFIUS legislation on May 22.
Nonetheless, credit union lobbyists said they were pleased with the House developments.
“NAFCU has been seeking relief for credit unions from the RBC rule since the NCUA finalized the rule,” said NAFCU President/CEO B. Dan Berger. “We are pleased to see our relief efforts continue to gain traction as we seek to protect credit unions from the adverse effects of the rule.”
Including the risk-based capital provision in the CFIUS legislation is the result of a two-year battle, said John McKechnie, senior partner at Total Spectrum.
“The effort to pass this two-year RBC delay bill is an example of how patience, and persistence, are virtues when it comes to legislating,” he said.
“CUNA has maintained since NCUA first proposed the risk-based capital rule that it is in solution in search of a problem, so we support any legislative means to reduce the rule’s impact on credit unions,” said CUNA Chief Advocacy Officer Ryan Donovan.