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NCUA proposal could stymie your plans for member service


Has your credit union submitted a comment letter yet regarding NCUA's risk-based capital proposal? League President & CEO Brett Thompson says the proposal, which has been called a "ground zero" issue for credit unions because of its potential to cut required capital buffers by billions of dollars, could prevent Wisconsin credit unions from realizing their future plans for member service.


At first glance, it would not appear that the effect is devastating to Wisconsin (login required). But Thompson, who chaired a recent CUNA subcommittee meeting with NCUA to address CU-system concerns about the proposal, says the real impact lies in how it could tie credit unions’ hands tomorrow.


For example, its effects could be stark if you wish to grow your mortgage or business lending portfolio or invest in a Credit Union Service Organization (CUSO).


Essentially, he explains, we as a movement face the same peril now as we did in 1998 when, as part of passing continued membership access rights as part of HR 1151, we found ourselves for the first time in history limited by an arbitrary cap on business lending.


"Few credit unions predicted then the extent to which it would harm their future service and growth potential," Thompson added. "And every year since then, we’ve been advocating with Congress to raise the cap by just a few percentage points when, prior to it being enacted, credit unions had an almost 100 year history of making safe and sound business loans with no limitations whatsoever."

"Clearly, it is easier in hindsight of a legislative or regulatory change to assess the limitations that are upon you than to look forward and estimate what they might become. But credit unions have a precious opportunity now to prevent the kind of damage that this proposal could cause so that years from now we are not wishing we had acted sooner. NCUA appears willing to make changes to the proposal, so providing feedback is very helpful."


To facilitate comments from credit unions, CUNA offers tools in its RBC Resource Center (login required) that include:


  • A template letter that you can customize ("Click to Take Action" link),

  • CUNA’s Comment Call, which provides an overview;

  • CUNA’s Inside Exchange video explaining how the proposal could impact credit union balance sheets;

  • CUNA’s recent RBC webinar  and other presentations;

  • Calculators to help you apply the proposal to your credit union’s situation and more.


The NCUA has also released video (in parts I and II) explaining the proposal.


While The League will urge the NCUA to consider whether the rule is needed at all given how well most credit unions came through the recent recession—and suggest ways to narrow the rule to minimize unintended consequences—credit unions can comment on the proposal by sending them to  Jo Whiting or Paul Guttormsson by May 1 to be reflected in The League’s Comment Letter or directly to the NCUA  by May 28.


Space is being limited  for NCUA listening sessions that will also touch on the issue.


The League advocates for Wisconsin credit unions on regulatory issues to ensure their voice is well represented on issues affecting the service that Wisconsin's 2.4 million members receive. Credit unions are represented in the regulatory advocacy process by The League's Regulatory Advocacy Council.

©2005 Wisconsin Credit Union League. All rights reserved.
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