Today, Sen. Richard Shelby (R-AL) sent a letter to the NCUA expressing his concerns over the proposed rule change regarding risk-based capital. Many of the concerns Sen. Shelby conveys mirror what the LSCU and CUNA have been sharing with his office and this letter should go a long way in helping correct this misguided idea.
In the letter, Shelby begins by saying the proposal will “unduly burden communities served by credit unions” and the rule has “potentially no beneficial upside.” Additional concerns raised involved whether the NCUA has the authority under the Federal Credit Union Act (FCUA). Shelby states “The FCUA conveys authority to NCUA only to establish a risk-based standard to weigh risk in circumstances where the net worth ratio does not provide adequate protection.” He continued saying the proposed rule imposes a risk-based standard to be well capitalized, which is could be beyond the scope of the FCUA.
Sen. Shelby concluded his letter citing the fact that credit unions and the Share Insurance Fund performed well during the last two financial crises and the proposal is a “solution in search of a problem.” While Sen. Shelby supports safety and soundness efforts, he is not convinced the proposal is necessary or that due diligence was conducted. Shelby notes the overwhelming number of Congressional contacts the NCUA has received since the inception of the proposal and closes by saying “I would also like to join them in their concerns as well.”
The League would like to thank Sen. Shelby for writing this letter and supporting Alabama’s credit unions.