NCUA Encourages Capital Reform
at Financial Symposium
May 26, 2005, Alexandria, Va. – David M. Marquis, Director of NCUA's Office of Examination and Insurance, covered key aspects of NCUA's Prompt Corrective Action (PCA) proposal for reform today in Washington during the Women in Housing and Finance's (WHF) symposium on Capital Issues for Financial Institutions. Mr. Marquis explained how reform of capital standards is vital for credit unions as other federal financial regulators explore implementation of BASEL II and other capital reforms for banks in the United States. The WHF symposium included sessions on Basel I, Basel II, GSEs (Government Sponsored Enterprises) and credit unions.
Though still maintaining a leverage ratio, NCUA's PCA reform proposal employs a more risk-based approach to credit union capital standards consistent with BASEL I and II. Representatives Ed Royce (R-CA) and Paul Kanjorski (D-PA) have included a risk-based PCA reform plan in the Credit Union Regulatory Improvements Act (CURIA), recently introduced in Congress, which NCUA supports.
The proposed risk-based system uses risk portfolios and weights based on the BASEL II standard approach. Marquis emphasized that the proposed capital reforms for credit unions are designed to achieve and maintain comparability with FDIC insured institutions. NCUA's PCA reform proposal achieves a much needed balance between enabling credit unions to utilize capital more efficiently to better serve their members and maintaining safety and soundness.
The National Credit Union Administration is the independent federal agency that charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates the National Credit Union Share Insurance Fund (NCUSIF), insuring the savings of over 83 million account holders in all federal credit unions and many state-chartered credit unions.
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