An Indepth LookAt the Stop and Study Bill

Introduced in June of 2015 and passed in September of the same year and backed by the NACFU, this legislation would stop the NCUA from moving forward with

The Bill passed with a 50-9 vote Requires the NCUA to review and report to

Congress how the rule effects credit unions and perform additional research on its legal authority in regards to RBC2

The Risk-Based Study Act

In a statement a chairman for NCUA, Debbie Matz has said their organization does have the legal authority to implement these Basel-like capitol requirements

Released a legal opinion from Paul Hastings LLP supporting this position

Board Member Mark McWatter has counted that this opinion is very weak and would vote against finalizing the rule in its current state

The major issues revolve around the NCUA’s legal authority to issue the rule as proposed, including, the ability to prescribe separate risk-based capital thresholds for well capitalized and adequately capitalized credit unions

Highlights

Costs is a major area of concern for the NAFCU in this proposal. NCUA’s own estimate approximates that it will cost $3.75 million for the agency to adjust its Call Report, update its systems and train staff for the proposed requirements. If this proposal were to be finalized, NCUA also estimates credit unions would incur an ongoing $1.1 million expense to complete the adjusted Call Report fields. While NAFCU is still analyzing the true costs of this proposal, we strongly believe that NCUA’s projections do not reflect actual amount the agency will spend implementing the proposed changes.

The impact the proposal has on credit union capitol buffers is of great concern for the NAFCU. Despite NCUA’s claim that only a limited number of credit unions will be impacted, this proposal would force credit unions to hold hundreds of millions of dollars in additional reserves to achieve the same capital cushion levels that they currently maintain.

NAFCU firmly believes that legislative changes are necessary to bring about comprehensive capital. Allowing credit unions to have access to supplemental capital sources, and making the statutory changes necessary to design a true risk-based capital system for credit unions

Read more about the Stop and Study Bill and about Mayer-Chatfield who has served

communities and financial institutions all across the United States since 1992