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RBC-Delay Provision Advances Out of Committee
Wednesday, May 23, 2018 6:45 AM

The House Financial Services Committee yesterday advanced out of committee a provision to delay the implementation of National Credit Union Administration's risk-based capital (RBC) rule by two years.

The Foreign Investment Risk Review Modernization Act of 2018 (H.R. 5841), which was introduced by Rep. Robert Pittenger (R-N.C.), deals with the Committee on Foreign Investment in the United States (CFIUS) but has language in Title VII that would delay the effective date of the RBC rule to Jan. 1, 2021. The current effective date is 2019.

H.R. 5841 passed the committee unanimously, with a 53-0 vote. 

Credit Union National Association highlighted the additional regulatory burden imposed by the rule in a letter to the House Financial Services Committee yesterday, and questioned whether the cost is justified. CUNA also noted that the current Prompt Corrective Action system served well during the financial crisis.

“During consideration of the Dodd-Frank legislation, Congress explicitly excluded credit unions from risk-based capital requirements, in recognition of the credit union difference and the fact that America’s credit unions—nearly half of which employ fewer than five full-time employees and hold less than $20 million in assets—were neither responsible for nor participatory in the risky financial activities that predicated the 2008 financial crisis," the CUNA letter reads. "The risk-based capital rule continues to be a solution in search of a problem.”

"Although Cornerstone supports a strong credit union system, we continue to believe the NCUA's rule as written will have a negative impact on the credit union industry, and the league has urged its withdrawal or modification because of increased regulatory burdens and costs," said Cornerstone SVP Regulatory Compliance Counsel Suzanne Yashewski.

U.S. Defense Secretary Jim Mattis has also urged that CFIUS legislation be included in the National Defense Authorization Act (NDAA), which is currently under consideration in the House.