Rep. Gary Miller (R-Calif.), the vice chairman of the House Financial Services Committee, submitted legislation on Friday that aims to provide credit unions and community banks with regulatory relief.
The legislation, H.R. 2572, contains a number of provisions that would alter regulatory capital requirements for credit unions through the adoption of a risk-based capital system by the National Credit Union Administration, which is intended to provide a more accurate measurement of a credit union’s risk profile and soundness.
The bill amends net worth categories to reflect risk-based net worth ratios and gives the NCUA board discretion in determining whether a credit union is adequately capitalized. The bill also grants federally-chartered credit unions parity with state-chartered credit unions in some areas, eliminating some of the restrictions imposed on federally-chartered credit unions.
Both the National Association of Federal Credit Unions and Credit Union National Association have expressed support for the legislation.
“A regulatory capital system that takes into account the risks of assets, rather than one which does not, will provide a more accurate measurement of a credit union’s risk profile and safety and soundness,” NAFCU said in a letter to the NCUA. “As you know, this is not a novel concept for most other financial institutions; unfortunately, however, credit unions have been required to function under and outdated, inflexible and generally unhelpful system that fails to adequately differentiate risks associated with different assets. As a result, credit unions’ ability to meet their members’ needs is unnecessarily limited.”
The legislation will likely be accompanied by other regulatory relief provisions expected to come out of the HFSC this year.