Ensuring credit union parity with potential bank capital reforms
It is critical credit unions are included in any potential bank capital relief and reforms, and Congress must encourage the NCUA to match any capital relief from banking regulators. America’s Credit Unions outlined why this is necessary in a letter sent ahead of a House Financial Services subcommittee hearing on banks’ capital framework.
“As economic conditions change, capital requirements for credit unions should adapt to ensure that industry earnings are being put to productive use, helping members, and fueling American growth rather than merely accumulating to satisfy outmoded perceptions of risk,” the letter reads. “Such changes are complementary to a healthy financial regulatory system and already bank regulators have taken steps to reduce capital requirements for large, complex banks.”
In yesterday’s letter, the Association told the House Financial Services Committee that Credit unions would benefit from NCUA providing the kind of capital relief the Fed is currently considering.
These could include:
- Adjustments to the Complex Credit Union Leverage Ratio (CCULR);
- Amendments to the NCUA’s subordinated debt rule;
- Adjustments to the complex credit union threshold to account for inflation and industry growth; and
- Adjustments to stress test capital tiers.
America’s Credit Unions told the Committee it also supports legislative efforts to raise the Federal Credit Union Act’s definition of a “new credit union,” as the dollar amount hasn’t been adjusted in many years, and expanding investment options under the Federal Credit Unions Act.