CUNA Calls for RBC Delay, Elimination of Loan Maturity Limits

CUNA urged the Senate Banking Committee to delay NCUA’s risk-based capital rule and eliminate maturity limits on federal credit union loans. CUNA outlined these issues in a letter sent for the record of the committee’s hearing on ways to enhance consumer access to capital.

 “Credit unions throughout the United States have expressed their significant concerns regarding NCUA’s risk-based capital standards for credit unions. These concerns relate both to the appropriateness of the regulatory burden this regulation imposes on credit unions as well as whether NCUA has the legal authority to impose a risk-based standard for determining whether a credit union is well-capitalized,” the letter reads. “NCUA’s rule imposes new regulatory burden on credit unions that the agency has failed to justify, and the rule represents a solution in search of a problem. The current Prompt Corrective Action system served very well during that crisis, with relatively few credit union failures.”

CUNA and the state leagues support House-passed legislation (H.R. 5841) that would delay the rule’s implementation date by two years, to Jan. 1, 2021.

The trades also believe that eliminating statutory restrictions on maturity of loans made by federal credit unions would help credit unions do more to provide access to capital.

Federal credit unions are permitted to make mortgage loans with maturities of more than 15 years, most other federal credit loans must have maturities of 15 years or less.

“This puts federal credit unions at an unnecessary disadvantage relative to many state chartered credit unions and other depository institutions. It also makes credit less available for federal credit union members because it complicates both credit unions’ ability loan to some education borrowers and to sell certain loans into the secondary market,” the letter reads. “Eliminating the statutory restriction on federal credit union loan maturity would help credit unions deliver more safe and affordable loan products to their members. We encourage Congress to eliminate these maturity limits for federal credit unions.”