NCUA Chairman Matz: Agency designing risk-based capital framework for CUs

Debbie Matz

Debbie Matz

National Credit Union Administration Chairman Debbie Matz said on Friday that the administration is currently crafting risk-based capital framework for credit unions.

Matz told attendees at the National Association of Federal Credit Union’s annual conference that she is committed to ensuring that credit unions are able to serve their members and potential members “consistent with safety and soundness.”

Additionally, Matz said the credit union industry has progressed and that NCUA has worked to grow with the industry, adding that one-size-fits-all approaches, including to capital requirements, are not appropriate for the industry in the years ahead.

“Congress set the seven percent net worth minimum in 1998 as part of the Credit Union Membership Access Act,” Matz said. “At the time, it was really just a best guess about what the future would require. Well, now we’ve seen the future. And now we know that this 15-year-old, one-size-fits-all standard is simply not enough to protect our system during a serious crisis.”

Matz said she has requested that the NCUA staff establish a new risk-based capital framework for credit unions that would require institutions that “deliberately” take on extra risk to hold additional capital.

“We need a flexible, forward-looking standard that makes sense for today and tomorrow,” Matz said, adding that the seven percent floor would remain, as required under the Federal Credit Union Act. “However, credit unions with assets over $50 million would be subject to improved risk-based capital requirements to better correlate required capital levels to risk. The result would be higher capital levels for credit unions with high concentrations of risky assets.”

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