Guam-based Coast 360 Federal Credit Union will pay $75,000 and furnish other relief to settle a sexual harassment case with the U.S. Equal Employment Opportunity Commission (EEOC).
In February 2012, a male employee filed a charge with the EEOC alleging that he was sexually harassed by a member of the credit union in 2011, including gestures of a sexual nature. The EEOC ultimately found reasonable cause that the credit union violated Title VII of the Civil Rights Act of 1964 for the sexual harassment to which the victim was subjected.
Read EEOC press release.
Monday, June 30, 2014
Friday, June 27, 2014
CU to Include Wireless Cafe and Coffee Shop in Branch
IntegrUS CU (Dubuque, IA) will include a wireless cafe and coffee shop in its new branch.
Caisse Cafe, which loosely translates into "credit union coffee" from French, will serve gourmet and flavored coffees, specialty beverages, and a limited assortment of baked goods and breakfast items.
However, why is a wireless cafe and coffee shop a permissible activity for a credit union?
Clearly, it has nothing to do with its tax-exempt mission. Any profits from this activity should be subject to unrelated business income taxation.
In addition, other taxpaying coffee shops should be concerned about this tax subsidized competitor encroaching on their market.
Read the story (subscription required).
Caisse Cafe, which loosely translates into "credit union coffee" from French, will serve gourmet and flavored coffees, specialty beverages, and a limited assortment of baked goods and breakfast items.
However, why is a wireless cafe and coffee shop a permissible activity for a credit union?
Clearly, it has nothing to do with its tax-exempt mission. Any profits from this activity should be subject to unrelated business income taxation.
In addition, other taxpaying coffee shops should be concerned about this tax subsidized competitor encroaching on their market.
Read the story (subscription required).
Thursday, June 26, 2014
Mountain America Fined for Violation of Fair Housing Act
The U.S. Department of Housing and Urban Development (HUD) announced that Utah-based Mountain America Credit Union, the second largest credit union in Utah and the 35th largest credit union in the United States, will pay $25,000 to settle allegations that the company discriminated against prospective borrowers on maternity leave.
Read the HUD press release.
Read the HUD press release.
Tuesday, June 24, 2014
Taxpayer Subsidized CU for Pro Athletes
The pending charter of a credit union for professional athletes demonstrates that the credit union tax exemption no longer serves its original purpose, ABA President and CEO Frank Keating wrote in an op-ed published in The Hill newspaper this morning.
“Why should pro athletes benefit from tax privileges that Congress intended for America’s low-income citizens?” Keating asked. “The inherent trade-off in the law making credit unions tax-exempt is that they are intended to serve low-income individuals who don’t have other financial options.”
Keating called on Congress to rein in credit unions that abuse their tax exemption to serve the wealthy, finance luxury goods like boats, make jumbo mortgage loans and buy stadium naming rights. “Are all credit unions earning their tax exemption by serving people of modest means? The existence of a credit union for pro athletes makes it clear that the answer is no.”
Read the op-ed.
“Why should pro athletes benefit from tax privileges that Congress intended for America’s low-income citizens?” Keating asked. “The inherent trade-off in the law making credit unions tax-exempt is that they are intended to serve low-income individuals who don’t have other financial options.”
Keating called on Congress to rein in credit unions that abuse their tax exemption to serve the wealthy, finance luxury goods like boats, make jumbo mortgage loans and buy stadium naming rights. “Are all credit unions earning their tax exemption by serving people of modest means? The existence of a credit union for pro athletes makes it clear that the answer is no.”
Read the op-ed.
Monday, June 23, 2014
ABA Comments on NCUA's Associational Common Bond Proposal
ABA on June 20 applauded the National Credit Union Administration’s proposed rule to clamp down on associations formed for the primary purpose of expanding federal credit union membership and offered suggestions to strengthen the proposal.
Under the proposal, the agency will determine whether an association has been formed primarily to expand credit union membership; if so, the FCU will not be able to include it in its field of membership.
The proposed rule will also expand the totality of the circumstances test to include additional criterion regarding corporate separateness between the association and the credit union. The association and the credit union will be required to operate in a way that demonstrates the separate corporate existence of each entity.
However, ABA called for NCUA to strengthen the test of independence between association and credit union. This would include prohibiting an FCU from paying a member’s association dues. Also, the board of the association should not have any credit union employees or officials, or their immediate family members, to ensure independence. NCUA should further strengthen the corporate separateness test by requiring that individuals not be able to join the association and an FCU simultaneously.
The comment letter requested that NCUA reconsider automatic qualification for certain customer-based associations, such as electric cooperatives and homeowner associations, and re-establish geographic limitations on associational membership.
Read the letter.
Under the proposal, the agency will determine whether an association has been formed primarily to expand credit union membership; if so, the FCU will not be able to include it in its field of membership.
The proposed rule will also expand the totality of the circumstances test to include additional criterion regarding corporate separateness between the association and the credit union. The association and the credit union will be required to operate in a way that demonstrates the separate corporate existence of each entity.
However, ABA called for NCUA to strengthen the test of independence between association and credit union. This would include prohibiting an FCU from paying a member’s association dues. Also, the board of the association should not have any credit union employees or officials, or their immediate family members, to ensure independence. NCUA should further strengthen the corporate separateness test by requiring that individuals not be able to join the association and an FCU simultaneously.
The comment letter requested that NCUA reconsider automatic qualification for certain customer-based associations, such as electric cooperatives and homeowner associations, and re-establish geographic limitations on associational membership.
Read the letter.
Saturday, June 21, 2014
CU Member's Yearlong Bureaucratic Nightmare
The Tampa Bay Tribune is reporting on Mike Jordan's nearly yearlong bureaucratic nightmare with Achieva Credit Union and the National Credit Union Administration (NCUA).
The story concludes that his experience "changed his opinion of credit unions as nonprofits looking out for the little guy."
The issue dealt with an "ädd-on" certificate of deposit (CD) issued by Achieva Credit Union that advertised that money could be added onto the CD. When Mike Jordan tried to add money the second time to the CD, the credit union refused.
Mike Jordan filed a complaint with NCUA in July of last year and proceeded to get the regulatory run-around.
However, he kept pursuing the issue and finally received a letter from NCUA dated May 30 that stated Achieva's disclosures were "not clear and conspicuous — a violation of the Truth in Savings Act." The credit union was instructed to correct the defective notice and to work with Jordan to find an amicable solution.
But it was only when contacted by the newspaper did the credit union management state that Mike Jordan would be reimbursed for the lost interest income.
Read the story.
The story concludes that his experience "changed his opinion of credit unions as nonprofits looking out for the little guy."
The issue dealt with an "ädd-on" certificate of deposit (CD) issued by Achieva Credit Union that advertised that money could be added onto the CD. When Mike Jordan tried to add money the second time to the CD, the credit union refused.
Mike Jordan filed a complaint with NCUA in July of last year and proceeded to get the regulatory run-around.
However, he kept pursuing the issue and finally received a letter from NCUA dated May 30 that stated Achieva's disclosures were "not clear and conspicuous — a violation of the Truth in Savings Act." The credit union was instructed to correct the defective notice and to work with Jordan to find an amicable solution.
But it was only when contacted by the newspaper did the credit union management state that Mike Jordan would be reimbursed for the lost interest income.
Read the story.
Thursday, June 19, 2014
Enforcement Actions in 2013
The National Credit Union Administration in 2013 issued 76 preliminary warning letters, 224 letters of understanding and agreement (of which one was published), and 1 cease and desist order.
The information was obtained through a Freedom of Information Act request.
Unlike the other federal banking regulators, NCUA does not publish enforcement orders in its Annual Report.
The information was obtained through a Freedom of Information Act request.
Unlike the other federal banking regulators, NCUA does not publish enforcement orders in its Annual Report.
Wednesday, June 18, 2014
Credit Unions Should Pay for Space and Services in Federal Buildings
The Federal Credit Union Act permits the free allotment of space and services in Federal buildings to credit unions serving federal employees.
Section 1770 of the Federal Credit Union Act was adopted during the Great Depression, when credit unions were in their formative years.
However, credit unions are no longer in their formative years. Many credit unions are financially viable and are no longer in need of this taxpayer assistance.
Yet, credit unions continue to receive free space and services from the Federal government.
This issue is not new. A 1971 study by the Government Accountability Office (GAO), formerly the General Accounting Office, recommended that credit unions be required to pay rent for space and services they use in Federal facilities.
GAO wrote:
The GAO further noted that other private organizations serving federal employees and veterans were paying the Federal government for space and services provided.
There is no reason why credit unions should be granted this preferential treatment. Credit unions should pay for space and services provided by the Federal government.
This is just another taxpayer subsidy to credit unions that needs to end.
Section 1770 of the Federal Credit Union Act was adopted during the Great Depression, when credit unions were in their formative years.
However, credit unions are no longer in their formative years. Many credit unions are financially viable and are no longer in need of this taxpayer assistance.
Yet, credit unions continue to receive free space and services from the Federal government.
This issue is not new. A 1971 study by the Government Accountability Office (GAO), formerly the General Accounting Office, recommended that credit unions be required to pay rent for space and services they use in Federal facilities.
GAO wrote:
We believe that a uniform Government-wide policy should be established to require credit unions which have attained an adequate degree of financial stability to pay for Federal space and related services which they use. We believe also that such a policy 1s warranted because many of the credit unions occupy substantial amounts of space and do not need Government flnancial assistance since they have attained a degree of financial stability that would enable them to pay for space, services, and personal property.
The GAO further noted that other private organizations serving federal employees and veterans were paying the Federal government for space and services provided.
There is no reason why credit unions should be granted this preferential treatment. Credit unions should pay for space and services provided by the Federal government.
This is just another taxpayer subsidy to credit unions that needs to end.
Tuesday, June 17, 2014
Supreme Court to Review Loan Officer Overtime Exemption
In a case which has importance to both banks and credit unions, the Supreme Court yesterday agreed to hear an appeal of last year’s D.C. Circuit Court of Appeals decision invalidating a Department of Labor rule that required banks to pay mortgage loan officers overtime. In the case of Mortgage Bankers Association v. Harris, the appellate court ruled that the department could not change its determination of exemption under the Fair Labor Standards Act without going through a formal rulemaking process.
The Labor Department had ruled in 2006 that mortgage loan officers were exempt employees under the FLSA, but it reversed itself in 2010. The Mortgage Bankers Association sued DOL, arguing that the government could not “significantly revise” its “definitive interpretation” without conducting an official rulemaking with notice and comment.
The Labor Department had ruled in 2006 that mortgage loan officers were exempt employees under the FLSA, but it reversed itself in 2010. The Mortgage Bankers Association sued DOL, arguing that the government could not “significantly revise” its “definitive interpretation” without conducting an official rulemaking with notice and comment.
Monday, June 16, 2014
DCU Pays Upfront Fee of $4.8 Million to Renew Naming Rights to Arena
Digital Federal Credit Union (DCU) paid an upfront fee of $4.8 million to renew its naming rights for ten years to the DCU Center in Worcester, Massachusetts.
In addition, the $5.6 billion credit union could pay annual incentive bonus payments up to a maximum of $1.75 million over the ten year term of the agreement.
However, buying the naming right to an arena is not the intended purpose of the credit union tax exemption.
Read the press release.
In addition, the $5.6 billion credit union could pay annual incentive bonus payments up to a maximum of $1.75 million over the ten year term of the agreement.
However, buying the naming right to an arena is not the intended purpose of the credit union tax exemption.
Read the press release.
Friday, June 13, 2014
Matz's Response to Chairman Hensarling on Reputational Risk
In a June 12 letter, NCUA Chairman Matz wrote House Financial Services Committee Chairman Hensarling stating that reputational risk is one of seven key risks that examiners use in assigning a credit union's CAMEL rating.
She stated that NCUA does not pursue enforcement or other actions soley based on reputation risk.
The letter also noted that four key risks including reputation risk are qualitative and difficult to quantify.
She further wrote that NCUA does not force a credit union "to change its business practices simply on a reputation risk matter."
She concluded by writing that reputation risk is not a standalone indicator; but rather it is used with other qualitative and quantitative indicators to form the supervisory approach for a federally-insured credit union.
She stated that NCUA does not pursue enforcement or other actions soley based on reputation risk.
The letter also noted that four key risks including reputation risk are qualitative and difficult to quantify.
She further wrote that NCUA does not force a credit union "to change its business practices simply on a reputation risk matter."
She concluded by writing that reputation risk is not a standalone indicator; but rather it is used with other qualitative and quantitative indicators to form the supervisory approach for a federally-insured credit union.
Thursday, June 12, 2014
GAO: CDCI CUs Weaker Than Certified Non-CDCI CUs
The Government Accountability Office (GAO) released a report which examined the performance of Community Development Capital Initiative (CDCI) participants of the Troubled Asset Relief Program.
As background, the U.S. Treasury in September 2010 invested $570 million TARP funds into 36 banks and 48 credit unions. The program was only eligible for certified Community Development Financial Institutions (CDFI). As of April 2014, 68 of the original 84 CDCI institutions remained in the program. Six banks and nine credit unions had exited through repayment, while one institution had exited as a result of its subsidiary bank’s failure.
The report found that "remaining CDCI banks generally are financially stronger than certified CDFI banks that did not participate in the program, but remaining CDCI credit unions are generally weaker than nonparticipating CDFI credit unions."
GAO concluded that CDCI credit unions were, in general, smaller and financially weaker than nonparticipating certified CDFI credit unions (non-CDCI credit unions).
As of December 31, 2013,
Read the report.
As background, the U.S. Treasury in September 2010 invested $570 million TARP funds into 36 banks and 48 credit unions. The program was only eligible for certified Community Development Financial Institutions (CDFI). As of April 2014, 68 of the original 84 CDCI institutions remained in the program. Six banks and nine credit unions had exited through repayment, while one institution had exited as a result of its subsidiary bank’s failure.
The report found that "remaining CDCI banks generally are financially stronger than certified CDFI banks that did not participate in the program, but remaining CDCI credit unions are generally weaker than nonparticipating CDFI credit unions."
GAO concluded that CDCI credit unions were, in general, smaller and financially weaker than nonparticipating certified CDFI credit unions (non-CDCI credit unions).
As of December 31, 2013,
- the remaining CDCI credit unions had a median return on average assets of 0.27, compared to 0.53 for non-CDCI credit unions.
- Twenty-six percent of CDCI credit unions were unprofitable compared to about 19 percent of non-CDCI credit unions.
- CDCI credit unions had a delinquent loan ratio of 1.78 -- 35 basis points higher than non-CDCI credit unions.
- CDCI credit unions had a median net worth ratio of 7.35, compared with 9.98 for non-CDCI credit unions.
- Forty-one percent of CDCI credit unions had net worth ratios less than 7 percent, while only about 10 percent of non-CDCI credit unions fell below the 7 percent threshold.
- CDCI credit unions had a median ratio of total delinquent loans to net worth of 9.18, compared to 8.30 for non-CDCI credit unions.
Read the report.
Wednesday, June 11, 2014
Taxpayer Subsidized Business School Loans for International Students
Some credit unions are providing taxpayer subsidized student loans to international students to attend prestigious business schools in the United States.
At least, four credit unions are participating with graduate business school programs in offering these private student loans to international students.
Quorum FCU (Purchase, NY) is participating in a student loan program for international students seeking an MBA from either the University of Pennsylvania's Wharton School or Cornell's Johnson Graduate School of Management.
Anderson School of Management at UCLA has partnered with Eli Lilly Credit Union (Indianapolis, IN) to provide loans up to $85000 to international students without needing a cosigner.
Kenan-Flagler School at UNC will permit students to borrow from Coastal Federal Credit Union (Raleigh, NC) without a cosigner. The loan amount is limited to a maximum amount of $45,000 per year. Coastal FCU has also partnered with Duke's Fuqua School of Business.
Stanford University's Graduate School of Business has partnered with the Star One Credit Union (Sunnyvale, CA) to provide loans to international business students.
But should the credit union tax subsidy go to fund loans for international students attending graduate business schools in the United States?
It also appears that these credit unions are using gimmicks to qualify these international students for credit union membership.
At least, four credit unions are participating with graduate business school programs in offering these private student loans to international students.
Quorum FCU (Purchase, NY) is participating in a student loan program for international students seeking an MBA from either the University of Pennsylvania's Wharton School or Cornell's Johnson Graduate School of Management.
Anderson School of Management at UCLA has partnered with Eli Lilly Credit Union (Indianapolis, IN) to provide loans up to $85000 to international students without needing a cosigner.
Kenan-Flagler School at UNC will permit students to borrow from Coastal Federal Credit Union (Raleigh, NC) without a cosigner. The loan amount is limited to a maximum amount of $45,000 per year. Coastal FCU has also partnered with Duke's Fuqua School of Business.
Stanford University's Graduate School of Business has partnered with the Star One Credit Union (Sunnyvale, CA) to provide loans to international business students.
But should the credit union tax subsidy go to fund loans for international students attending graduate business schools in the United States?
It also appears that these credit unions are using gimmicks to qualify these international students for credit union membership.
Monday, June 9, 2014
Vikings to Czars Junket
Here is another example of a credit union conference boondoggle.
EduCruises Credit Union Conference has a Scandinavia/Russian Voyage, which runs from August 1 through August 13.
Conference participants and their guests will travel the Baltic on Celebrity Constellation®.
Looking at the program, it seems that there will be four classroom days of the 13 day trip. The bulk of the trip involves sightseeing.
The cost for conference attendees ranges from $4,842.24 to $7,526.24. The companion rate ranges from $3,042.24 to $5,726.24.
However, if cruising the Baltic is not your cup of tea, you can plan to cruise the French Wine Country next year.
But should credit union members be paying for credit union officials to take a Baltic or French Wine Country junket?
For more info click here.
EduCruises Credit Union Conference has a Scandinavia/Russian Voyage, which runs from August 1 through August 13.
Conference participants and their guests will travel the Baltic on Celebrity Constellation®.
Looking at the program, it seems that there will be four classroom days of the 13 day trip. The bulk of the trip involves sightseeing.
The cost for conference attendees ranges from $4,842.24 to $7,526.24. The companion rate ranges from $3,042.24 to $5,726.24.
However, if cruising the Baltic is not your cup of tea, you can plan to cruise the French Wine Country next year.
But should credit union members be paying for credit union officials to take a Baltic or French Wine Country junket?
For more info click here.
Friday, June 6, 2014
Wall Street Journal: Credit Unions Are Assuming More Risk
Credit unions in search of higher returns are loosening lending standards and piling into longer-term assets, exposing the firms to potentially significant losses if interest rates rise and worrying regulators in the process.
Read the story (paid subscription).
Read the story (paid subscription).
Pennsylvania State Employees Credit Union
Pennsylvania State Employees Credit Union recently built this 238,000 square foot corporate office building at a reported cost of $71 million. The credit union at the end of 2013 had $4.1 billion in assets and reported a profit of almost $17.5 million. However, the credit union paid ZERO corporate income taxes.
Wednesday, June 4, 2014
Florida Central Credit Union to Buy Bank Branch and Deposits
The Tampa Bay Business Journal is reporting that Florida Central Credit Union is seeking regulatory approval to buy a Sarasota branch along with the deposits from First Federal Bank of Florida.
The credit union plans to acquire the First Federal Bank branch office at 3451 Cattleman Road in Sarasota. The transaction would include the deposit accounts of about 600 bank customers, if they choose to opt in to credit union membership.
The bank branch had about $14.9 million in deposits as of June 30, 2013.
If approved by regulators, the deal should close in July.
Read the story.
The credit union plans to acquire the First Federal Bank branch office at 3451 Cattleman Road in Sarasota. The transaction would include the deposit accounts of about 600 bank customers, if they choose to opt in to credit union membership.
The bank branch had about $14.9 million in deposits as of June 30, 2013.
If approved by regulators, the deal should close in July.
Read the story.
Tuesday, June 3, 2014
Credit Unions Post Solid Growth for Q1, Earn $2.1 Billion
The National Credit Union Administration (NCUA) is reporting that credit unions posted solid growth over the last year.
Total assets grew $42.6 billion, or 4.0 percent, from the first quarter of 2013, reaching $1.1 trillion.
Share and deposit accounts rose 3.6 percent over the year to $943.1 billion, compared to $910 billion at the end of the first quarter of 2013.
In the first quarter of 2014, outstanding loan balances were up 8.8 percent from the first quarter of 2013 to $652.7 billion. The increase in loans was broad-based. Year-over-year, new auto loans were up 13.9 percent; used auto loans grew 11.3 percent; member business loans rose 11.1 percent.
However, higher interest rates slowed the pace of mortgage origination during the first quarter. Credit unions originated an annualized $42.6 billion in fixed-rate, first real estate loans in the first quarter, down from $102.9 billion in the first quarter of 2013.
The growth in total loans contributed to a 3.3 percentage point rise in the overall loans-to-shares ratio relative to a year ago, to 69.2 percent, the highest first-quarter ratio since 2010.
However, NCUA expressed concern about credit unions adding long-term investments to their portfolios. Investments with maturities of three years or less fell $22 billion, while investments with maturities greater than three years grew $20.5 billion. The net long-term asset ratio was 35.49 percent at the end of the first quarter of 2014.
Credit unions reported net income of $2.1 billion for the first three months of 2014. Interest income was up $226 million from a year ago to almost $9 billion. Total interest expenses fell by 9 percent over the year to slightly more than $1.43 billion. But non-interest income fell by roughly $234 million year-over-year to almost $3.4 billion.
The return on average assets was 78 basis points at the end of the first quarter, which was equal to the 2013 year-end figure and down 5 basis points from a year earlier.
The aggregate net worth ratio fell 16 basis points from the end of 2013 to 10.61 percent at the end of the first quarter, but was 31 basis points higher than the end of the first quarter of 2013. Ninety-six percent of federally insured credit unions were well-capitalized with a net worth ratio at or above the statutorily required 7.0 percent.
Asset quality continued to improve as both net charge-offs and delinquencies fell. The delinquency rate on credit union loans was 0.81 percent as of March 31, 2014. Net charge-off rate was 0.50 percent for the first quarter of 2014.
NCUA noted a bifurcation in the credit union industry performance. Large credit unions continue to prosper, while small credit unions are struggling financially. Small credit unions with less than $10 million in assets reported a decline in loan, net worth, and membership growth during the first quarter of 2014.
Read the press release.
Total assets grew $42.6 billion, or 4.0 percent, from the first quarter of 2013, reaching $1.1 trillion.
Share and deposit accounts rose 3.6 percent over the year to $943.1 billion, compared to $910 billion at the end of the first quarter of 2013.
In the first quarter of 2014, outstanding loan balances were up 8.8 percent from the first quarter of 2013 to $652.7 billion. The increase in loans was broad-based. Year-over-year, new auto loans were up 13.9 percent; used auto loans grew 11.3 percent; member business loans rose 11.1 percent.
However, higher interest rates slowed the pace of mortgage origination during the first quarter. Credit unions originated an annualized $42.6 billion in fixed-rate, first real estate loans in the first quarter, down from $102.9 billion in the first quarter of 2013.
The growth in total loans contributed to a 3.3 percentage point rise in the overall loans-to-shares ratio relative to a year ago, to 69.2 percent, the highest first-quarter ratio since 2010.
However, NCUA expressed concern about credit unions adding long-term investments to their portfolios. Investments with maturities of three years or less fell $22 billion, while investments with maturities greater than three years grew $20.5 billion. The net long-term asset ratio was 35.49 percent at the end of the first quarter of 2014.
Credit unions reported net income of $2.1 billion for the first three months of 2014. Interest income was up $226 million from a year ago to almost $9 billion. Total interest expenses fell by 9 percent over the year to slightly more than $1.43 billion. But non-interest income fell by roughly $234 million year-over-year to almost $3.4 billion.
The return on average assets was 78 basis points at the end of the first quarter, which was equal to the 2013 year-end figure and down 5 basis points from a year earlier.
The aggregate net worth ratio fell 16 basis points from the end of 2013 to 10.61 percent at the end of the first quarter, but was 31 basis points higher than the end of the first quarter of 2013. Ninety-six percent of federally insured credit unions were well-capitalized with a net worth ratio at or above the statutorily required 7.0 percent.
Asset quality continued to improve as both net charge-offs and delinquencies fell. The delinquency rate on credit union loans was 0.81 percent as of March 31, 2014. Net charge-off rate was 0.50 percent for the first quarter of 2014.
NCUA noted a bifurcation in the credit union industry performance. Large credit unions continue to prosper, while small credit unions are struggling financially. Small credit unions with less than $10 million in assets reported a decline in loan, net worth, and membership growth during the first quarter of 2014.
Read the press release.
Monday, June 2, 2014
Matz's Letter to Reps. King and Meeks on Risk-Based Capital Proposal
On May 30th, NCUA Chairman Debbie Matz wrote Representatives King and Meeks regarding their May 15 letter about NCUA's risk-based capital proposal. (Read the King-Meeks letter)
The King-Meeks letter encouraged the NCUA Board to take into account the cost and burden of implementing the new risk-based capital requirements beyond the current leverage ratio; to provide a justification for the proposed risk-weights and why the proposed risk-weights differ from those for community banks; and to give credit unions more than 18 months to comply with the risk-based capital requirements, when finalized.
In her letter, Chairman Matz pointed out the need for the proposed rule and sets forth why the risk-weights for some asset classes diverge from those for community banks.
She noted that "[b]y law, NCUA must adopt a risk-based capital rule that is comparable to the rules for banks but that also takes into account any material risks to credit unions, such as interest rate risk and concentration risk in addition to credit risk."
She does appear to be sympathetic to giving credit unions an adequate amount of time to comply with the regulation, when it is finalized.
However, the letter makes it pretty clear that she has taken an exception to the dissemination of misinformation about the costs of the proposed rule from some trade associations.
Below is Chairman Matz's letter.
The King-Meeks letter encouraged the NCUA Board to take into account the cost and burden of implementing the new risk-based capital requirements beyond the current leverage ratio; to provide a justification for the proposed risk-weights and why the proposed risk-weights differ from those for community banks; and to give credit unions more than 18 months to comply with the risk-based capital requirements, when finalized.
In her letter, Chairman Matz pointed out the need for the proposed rule and sets forth why the risk-weights for some asset classes diverge from those for community banks.
She noted that "[b]y law, NCUA must adopt a risk-based capital rule that is comparable to the rules for banks but that also takes into account any material risks to credit unions, such as interest rate risk and concentration risk in addition to credit risk."
She does appear to be sympathetic to giving credit unions an adequate amount of time to comply with the regulation, when it is finalized.
However, the letter makes it pretty clear that she has taken an exception to the dissemination of misinformation about the costs of the proposed rule from some trade associations.
Below is Chairman Matz's letter.
