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First Family FCU has Some Concerns about NCUA's Risk-Based Capital Calculator
Monday, January 27, 2014 6:50 AM

The National Credit Union Administration last week announced that it has created an innovative online tool to help federally insured credit unions better understand how the proposed changes to the Prompt Corrective Action rule may affect their risk-based capital ratios. David Dykes, president and CEO of First Family FCU, says after reviewing the risk based capital calculator, the Henryetta, Okla.-based credit union would remain well capitalized based on its September 2013 call report. However, that doesn’t mean he doesn’t have his concerns.

“I always get a little nervous when the rules of the game change in the middle of the game,” notes Dyke. “With the particulars of the new proposed requirements (as I understand), I am concerned about the impact it may have on a credit unions future growth aspirations and the subjective factors which would allow NCUA to raise an individual credit union’s risk-based capital level requirements.”

Dykes still has a lot of questions, including who has the discretion to impose additional requirements on a credit union - the examination team alone?

“Ironically, First Family just finished a fair lending compliance examination.  During that process, it was brought to my attention that whenever subjective factors are used to determine loan decisions, it opens the door for possible discrimination liability and best practice is to eliminate as many subjective loan policy factors as possible,” adds Dykes.

“Hopefully, NCUA will devise a set of published standards that eliminates as much subjectivity as possible before requiring additional capital requirements,” continues Dykes.

The new Risk-based Capital Calculator is available at http://rbnw.ncua.gov.

To help credit unions use the calculator, a new instructional video is available here.

The NCUA Board approved the proposed Capital Adequacy Rule for a 90-day comment period at today’s meeting. The proposed rule is available for review here.