There are three ways to comment on the
NCUA's proposed risk-based capital rule



(703) 518-6391
Attn: Mr. Gerard Poliquin, Secretary, NCUA Board



Mr. Gerard Poliquin
Secretary, NCUA Board
1775 Duke Street
Alexandria , Va. 22314-3428
Ref: NCUA Risk-Based Capital Proposed Reg


Analysis of the RBNW Rule Part 1

By Jim Vilker, NCCO, CU*Answers VP Professional Services, AuditLink

"Credit unions should consider resisting the Rule on holistic grounds, its questionable legal authority, and the detailed changes in the Rule itself. RBC should not become law."

"…this Rule will lead to less diverse credit union portfolios and create potentially dangerous concentrations caused by credit union adherence to the standards being proposed."

"In and of itself, this rule creates more risk than it proposes to control."

"Effective supervision is not rule making; it is intelligent supervision and patient reorganization when problems arise. This is lacking in our CU regulatory community today."

Analysis of the RBNW Rule Part 2

By Jim Vilker, NCCO, CU*Answers VP Professional Services, AuditLink

"Will this not force the industry into potential areas of investment and lending the credit union lacks experience with or industry wide concentrations that could be impacted by similar economic variables? In and of itself, this rule creates more risk than it proposes to control."

"The idea that passing a rule—the typical government reaction—can stop fraud, eliminate mismanagement and prevent external circumstances from decimating a credit union's market environment is wrong."

Analysis of the RBNW Rule Part 3

By Jim Vilker, NCCO, CU*Answers VP Professional Services, AuditLink

"As guidelines, the NCUA would have greater flexibility to take in consideration the field of membership of the credit union and its charter, and would help identify areas of potential risk without forcing a credit union to institute changes both potentially drastic and unwarranted in the institution’s balance sheet."

"The NCUA has to reach by arguing that the agency meets the regulation by creating a separate “well capitalized” tier, when the plain language of Section 216 refers only to “adequately capitalized credit unions.” The NCUA’s support is that the agency “could reasonably impose different degrees of protection” when the statute itself says no such thing."

To say that NCUA’s revised RBC rule is a ‘problem looking for a solution’ is too kind, since it presumes that if there were an actual problem, RBC II would be a reasonable solution,” said Doug Fecher, President/CEO of Wright-Patt Credit Union in Beaver Creek, Ohio. “I prefer to say it this way … ‘NCUA’s revised RBC rule is a solution that won’t work for a problem that doesn’t exist.’

Doug Fecher, Wright-Patt Credit Union Beavertown, Ohio

For those of us who remember when the airline industry went into crisis with mergers and failures, their credit unions survived to serve their members; when the auto industry closed plants and had layoffs, their credit unions converted to communities to be there for the workers and families; when the housing crisis hit in California, Florida, and Arizona, credit unions rewrote billions of mortgage loans to keep people in their homes until they got back on their feet. The rule undermines the core of credit union effectiveness by having government rules, not the member-owner’s well-being, be the focus of business strategy.

Barbara Sagman, AAC Credit Union Grand Rapids, Mich.

It’s a truism that no matter how well you execute a bad idea, the result will still be bad. So it is with the NCUA’s proposal. It is bad for credit unions, bad for credit union member-owners like myself, bad for the movement, bad for the cause of financial cooperatives, and ultimately I suspect, even bad for the NCUA.

Christopher Howard, Arlington Community Federal Credit Union Arlington, Va.

Many of the failures this proposed rule is trying to mitigate do not consider the real reasons for the losses during the great recession. As was shown during the board meeting and in the proposal, over 40% of failures were the result of fraud; all of us have followed the St. Paul Croatian’s fraud loss dilemma, which cost the insurance fund $170 million dollars to date.

Robert Holmes, Chartway Federal Credit Union Virginia Beach, Va.

The revised RBC rule penalizes credit unions for specific activities such as real estate lending, member business lending, and credit unions chartered to assist the un-bankable by placing a capital tax on the resulting assets of low income or poor credit lending.

Jim Jordan, Schools Financial Credit Union Sacramento, Calif.

Congress never intended for the NCUA to develop complex rules that are intended to limit the ability of credit unions to serve their members. This rule will limit our ability to serve those who need our help the most. It will also serve to stifle innovation for fear that NCUA will see any risk taking as too risky.

Lonny Mauer, Bellco Credit Union Harrisburg, Pa.

As NCUA continues to work on the RBC regulation, I would urge the agency to recognize the unique nature of credit unions with regard to how capital is considered. Bank regulations should not be less burdensome and onerous than those confronting credit unions.

Geoff Bacino, Former NCUA Board Member Bacino & Associates Alexandria, Va.

We believe that the RBC rule will increase costs to members, expand the right of the NCUA to interfere in the governance of credit unions through Prompt Corrective Action (“PCA”), and threaten the financial stability of the industry long term.

Raymond Manofsky, Seven Seventeen Credit Union Warren, Ohio

This is the worst rule since the Stamp Act.

Melissa Hunt, Credit Union Student Choice Washington, D.C.

And Michael Wettrich, President/CEO of Education First Credit Union in Westerville, Ohio, stated NCUA should not “[The risk-based capital rule would] force my credit union to institute changes both potentially drastic and unwarranted in our balance sheet to meet arbitrary weights.

Michael Wettrich, Education First Credit Union Westerville, Ohio

We believe NCUA again focused on the potential risk to the insurance fund rather than those they regulate and their members.

Patty Sarne, COO/SVP of San Antonio Citizens Federal Credit Union San Antonio, Texas

The rule undermines the core of credit union effectiveness by having government rules, not the member-owner’s wellbeing, be the focus of business strategy,” wrote Chris Otey, Chief Revenue Officer at Woodland Hills, Calif.-based CU Wallet, and Vice Chairman of South Bay Credit Union in Redondo Beach, Calif.

Chris Otey, Chief Revenue Officer. CU Wallet Vice Chairman, South Bay Credit Union Redondo Beach, Calif.

The follwing are a sample of the comments filed in response to the first proposal in 2014. These will be updated as new comments are filed:

Gregg Stockdale at 1st Valley Credit Union

"This proposal is the equivalent of a push-broom with 2/3's of the teeth missing."

Daniel Popper at Archer Credit Union

"…an unrealistic burden on small rural credit unions like ours."