Larry Fazio's editorial on NCUA's risk-based capital proposal says credit unions spoke and NCUA listened. He is correct in saying the agency made many changes to its risk-based capital proposal in response to commenters. Convincing NCUA to make those changes, though, took more than 2,000 comment letters, inquiries from more than 325 members of Congress from both chambers and parties, a credit union working group and countless meetings and discussions.

On behalf of NAFCU's members, I am going to call on NCUA to lean in a little closer and really hear what we are saying: We still do not need this rulemaking. NCUA should take the capital debate to Capitol Hill. Capital reform needs to encompass statutory changes to allow credit unions to be as nimble as possible while still addressing necessary risks.

NAFCU is pleased that NCUA has listened to our members and the whole credit union community, but the discussion is not complete — the agency needs to hear what we are saying and keep capital in the marketplace instead of parked on a balance sheet. 

While many changes were made, there are still many problems with this proposal despite its 500-page span.

First, there is the matter of cost. By NCUA's own estimation, this proposed rule would cost credit unions more than $5 million just for "policy review and revision." There is the $3.75 million NCUA expects to spend updating the 5300 Call Report and an additional $1.1 million for credit unions to complete the adjusted call report fields. The few dozen credit unions NCUA says would be downgraded under the proposal would need to add $53.6 million in capital — funds that might be used elsewhere for loans and services — to remain well-capitalized.

Furthermore, the capital cushion that even many examiners have encouraged is not even addressed in those figures.

Second, the industry today is extremely well-capitalized, so we're hard-pressed to find the logic in promulgating a sizeable new regulation that, despite its limitations, will add significantly to the regulatory burden of all insured credit unions.

Bottom line: This risk-based capital proposal, like the first, falls short. Why? Because a new rule is an inadequate means by which to establish a truly complete capital regime for credit unions. NAFCU believes achieving a fair, comprehensive system of capital for credit unions will require changes to the Federal Credit Union Act — from both legal and operational perspectives; we need Congress to engage.

We look forward to a robust dialogue on capital during this new comment period and ask credit unions to make their voices heard.

For its part, NAFCU is committed to doing whatever it takes at the regulatory agency and on the Hill — to ensure that a fair system of risk-based capital is established for credit unions.

Carrie Hunt is NAFCU's senior vice president of government affairs and general counsel.