RBC Delay Draws Reactions from Dennis Dollar, NAFCU, NASCUS


Dennis Dollar

ARLINGTON, Va.–Following the NCUA board’s 2-1 vote to delay its risk-based capital rules for another two years until Jan. 1, 2022, NAFCU and former NCUA chairman Dennis Dollar responded--Dollar questioning now whether the rule will ever become final, while NAFCU expressed support for the decision.

The proposal is now out for a 30-day comment period.

“This action is a positive one and reflects the ongoing ebb and flow of regulatory actions and changes to those regulations over time as times, boards and circumstances change," said Dollar. "Chairman D’Amours passed the Community Action Program as a type of CRA for credit unions until the Dollar administration reversed it before it went into effect. The Dollar administration passed and implemented RegFlex until the Matz administration undid it. The Matz administration was totally in on RBC as absolutely essential in their view, but now the McWatters and Hood administrations are essentially delaying it into a timeline that will make it difficult to implement with any real impact.

"This action basically assures that, if RBC is ever to become a final and implemented regulation, it will have to be started from scratch with supplemental capital included and a more credit union by credit union approach than the current one-size-fits-all risk weighting categories," continued Dollar. "There will always be future boards with future priorities dealing with future circumstances.  It happens in every industry and with every regulatory agency.  This is the never-ending regulatory pendulum swinging election to election, chairman to chairman, board to board and circumstance to circumstance.  But, in my view, RBC as we knew it is very unlikely to ever become a final, implemented rule following today's action. With supplemental capital on the horizon and the necessity of it being incorporated into RBC if it ever is going to take place, I think that is a good thing.”

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Dan Berger

In a statement, NAFCU said it has led efforts to "ensure credit unions and their members benefit from a modern capital regime.”

"We appreciate NCUA Chairman Rodney Hood's and Board Member J. Mark McWatters' efforts to provide this additional delay in order to provide the agency more time to reform its risk-based capital rule," said NAFCU President and CEO Dan Berger. "As the rule currently stands, NAFCU remains concerned about the regulatory burdens and costs the rule will place on credit unions."

Board Member Todd Harper voted against the delay.

Berger said he has  encouraged the NCUA to "consider its entire rulemaking anew" following the enactment of S. 2155, which made changes to bank capital, and added NAFCU will continue to encourage the agency to design a true risk-based capital system for credit unions.

Meanwhile, in response to a statement by Chairman Hood that NCUA will our forth a proposal on subordinated debt before year end, NASCUS CEO Lucy Ito issued a statement saying, “NASCUS commends the NCUA Board for its commitment to propose a subordinated debt rule by year-end,” said NASCUS President & CEO Lucy Ito. “We agree with Chairman Hood that it is “sensible” for credit unions to use subordinated debt to meet capital requirements and protect the National Credit Union Share Insurance Fund. We have long held that subordinated debt should be a part of the risk-based capital framework because it encourages well-managed credit unions to attract additional loss-absorbing forms of capital that they would otherwise forego. Indeed, the point of risk-based capital rulemaking is to increase the capital buffer standing before the share insurance fund and subordinated debt is wholly consistent with that goal.  NASCUS will continue to engage with NCUA as it develops the rule to bring state regulator experience to the dialogue.”

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