House Advances Fincher Bill to Prevent Overregulation in Local Communities

Press Release

Today, Representatives Stephen Fincher (TN-08), Bill Posey (FL-08) and Denny Heck (WA-10) applauded the House Financial Services Committee for passing their bill to require the National Credit Union Administration (NCUA) to perform a study of appropriate capital requirements for credit unions. The Risk-Based Capital Study Act of 2015 (H.R. 2769), bipartisan legislation they introduced in June, will strengthen our financial system by ensuring that financial institutions are not subjected to excessive and undue burdens that ultimately cause harm to communities.

"Time and again these regulatory proposals look more like a solution in search of a problem than a step toward growing our economy and ensuring the security of our financial system," said Congressman Fincher. "In order to grow opportunities for consumers and American families back home, we must work to block the regulatory burdens on financial institutions that are hindering economic growth. Our bill puts appropriate requirements in place to ensure that local communities are not harmed by overregulation."

"Every regulator should take time and effort to evaluate the regulations they propose so we can better understand their implications," said Congressman Posey. "By requiring a comprehensive study of the NCUA proposed rule, our bipartisan bill will set us on the right track toward a better designed risk-based capital system that won't adversely impact the millions of Americans throughout our communities who utilize the important financial services provided by credit unions."

"I support the critical role that the banking regulators play, but I also believe they don't always get the right balance," said Congressman Heck. "Some form of capital buffer is essential, but there are simpler and more complex options for how to ensure it. Complex banks require complex capital calculations, but I don't believe the same thing is true for traditional main street institutions. With respect to small community banks, I am seeing a welcome willingness to consider shifting from complex risk-based capital rules back to simple leverage ratios. I think that is the right direction, so it would be a significant mistake for the credit union regulator to move in the opposite direction, especially while credit unions are unable to add supplemental capital. This bill asks the NCUA to revisit the proposal and reconsider what is best for credit union members."

Background on H.R. 2769:

On January 15, 2015, the National Credit Union Administration (NCUA) Board, in a 2-1 vote, issued a revised risk-based capital proposed rule for credit unions. While the revised proposal addresses some concerns expressed by Congress and by credit unions regarding the initial proposal, it still has raised a lot of concern in the credit union community -- as evidenced by the revised proposal receiving over 2,150 comments during the comment period. A thorough study of the proposal before it moves forward is necessary to ensure credit unions and the communities they serve are not unduly burdened. Given the critical role credit unions play in lending to our local communities, it's absolutely imperative that this proposal is reviewed closely before a judgment is made relative to moving forward.

The Risk-Based Capital Study Act of 2015 would require the NCUA to provide to Congress an analysis on their legal authority with respect to certain aspects of the proposal, rationale behind the risk-weights assigned to various asset classes, and a close look at how the proposal would impact lending to credit union members before moving forward with their proposed rule.

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