Below is a letter Vic Pantea recently sent to the NCUA Board of Directors advocating for abandoning risk-based capital regulation on the grounds that the FDIC gave it up for its regulated banks under $10 billion. Do you agree with him?
Subject: FDIC Final Rule on RBC for Community Banks under $10 B
NCUA Board Members:
On September 17, the FDIC adopted a final rule which defined the optional simplified measure of capital adequacy for qualifying community banking organizations. Also known as the community bank leverage ratio this rule was required by the Economic Growth Regulatory Relief and Consumer Protection Act. Under this rule all community banks less than $10 billion in consolidated assets and maintaining a tier 1 leverage ratio of greater than 9% will not be required to report or calculate risk-based capital.
I hope that this action by your fellow agency will bring to a final and well-deserved demise any NCUA efforts to develop risk-based standards for implementation in credit union leverage calculations. I feel that it has been proven since our earliest discussions that efforts to implement RBC in the nation’s credit unions was an ill-conceived regulatory intrusion into safety and soundness calculations. Certainly, this FDIC decision should quickly bring to an end the use of funds necessary to continue the study of RBC approved in the June 2019 Board Meeting.
I look forward to your individual responses to the FDIC final rule and the subsequent board actions necessary to remove the regulatory threat of RBC for all credit unions under $10 B.