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Compliance

Multi-pronged strategy aims to protect business, mortgage lending

 

CUNA analysis shows that 82% of Wisconsin credit unions would see their cushions over "well capitalized" levels shrink under the National Credit Union Administration’s Risk-Based Capital proposal. Seventeen Wisconsin credit unions would see a reduction in the cushion above well capitalized of at least 100 basis points on assets. Your credit union’s comments on the proposal play a critical role in a multi-pronged strategy to prevent the potential damage to member service that is likely to result if the plan is enacted as-is. Weigh in by May 28!

Your comments are WORKING to improve the outcome!

 

75% of U.S. Reps. and the former Senate Banking Committee Chair have joined our effort to improve NCUA's proposal, which would drain $200 million in active capital from Wisconsin credit unions, for a total drain on the system of $7.3 billion.

 

Because the plan is expected to cut credit unions' required capital buffers by billions of dollars – forcing credit unions to react in ways that may harm their earnings as well as member service – it has been called a "ground zero" issue. As such, CUNA, state leagues and credit unions are pursuing a multi-pronged strategy to mitigate the plan’s potentially harmful effects.

 

The proposal will affect all federally insured credit unions—including state chartered credit unions—with over $50 million in assets. It would include risk-weighting of certain assets (e.g., real estate, member business loans and investments in CUSOs) and allow NCUA to raise the risk-based capital requirement of an individual credit union above the normal threshold levels based on subjective factors.

 

Our battlefront includes:

 

  • Grassroots activism: Every credit union is urged to file a comment letter with NCUA by the May 28 deadline sharing specific examples of how your future plans and member service will be curtailed by the plan as written. One concerned credit union director wrote that the current plan would "change the future of credit unions, and not for the good." Calculators to help credit unions project the plan’s impact – as well as a letter template and other resources – are available in CUNA’s RBC Resource Center (login required).

 

 

  • Legislative action: Members of Congress and their staff are informing and influencing the process thanks to input from credit unions that, in turn, enable them to raise important issues about the proposal. For example, Wisconsin Representatives Sean Duffy (R-Weston), Ron Kind (D-LaCrosse), Reid Ribble (R-Sherwood), Gwen Moore (D-Milwaukee), Mark Pocan (D-Madison) and Jim Sensenbrenner (R-Menomonee Falls) have already agreed to sign on to a letter with other representatives in Congress raising questions about NCUA’s proposed rule. The League is sharing the opportunity with other Wisconsin members of Congress for their consideration.

 

"It would be imprudent not to explore every avenue for engagement on this issue," said League VP of Government Affairs Tom Liebe. "Together, credit unions, CUNA and Leagues are leveraging relationships with NCUA technical staff, using the rule comment process and encouraging Congressional oversight to give us the best chance at affecting change."

 

League President & CEO Brett Thompson, who chaired a meeting recently of the CUNA Examination and Supervision Subcommittee and NCUA that posed the growing litany of credit union concerns on both legal and economic grounds, said representatives from the agency are considering the issues that have been brought to light. 

"This makes your opinion all the more important, so please be sure to submit a comment letter by May 28. When you do so, copy The League and your representatives in Congress," he said.

 

"The influence that we can have now–with the help of our elected officials—is absolutely critical. We don’t want to find ourselves years down the pike wishing we had done more to effect something that could have a detrimental impact on members tomorrow," Thompson emphasized.

 


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