The Response To Representative McHenry: Somebody Appears to Be Lying...

This could get interesting -
under oath!

As you know Representative Patrick McHenry (R-NC), who sits on the House Financial Services Committee, wrote to Chairman Matz on July 7, 2014 asking for an explanation of the many "anomalies" (nicest word I could come up with!), which surround the proposed NCUA risk-based capital (RBC) rule.  Here's a link to Representative McHenry's letter to Chairman Matz.

Representative McHenry asked for a response by July 18, 2014 from Chairman Matz about the issues he had raised.  Here's a link to Chairman Matz's letter of response.

Would like to call your attention to the 4th and last paragraphs on page 5 of Chairman Matz's letter which read as follows:

"Individual Minimum Capital Requirements"

"The proposed rule includes a provision that permits the NCUA Board (not any individual examiner) to require a higher minimum capital ratio for an individual credit union in an extraordinary case where the circumstances indicate that a higher risk-based capital requirement is appropriate.  The proposed rule also sets forth specific due process procedures that NCUA must follow before issuing an individual minimum capital requirement, including prior notice and a right of appeal." (paragraph 4, page 5)

"While it is the examiner's duty to recommend, through the chain of command, the imposition of an individual minimum capital requirement, if one is necessary, nothing in the proposed rule would authorize an examiner to take such action directly. Thus, this authority would be reserved solely for the NCUA Board." (last paragraph, page 5)

Having read Chairman Matz's response to Congress, would like to draw your attention to the actual verbatim language of the proposed RBC rule as published in the Federal Register (Vol. 79, No. 39, pg. 11207 - Feb. 27, 2014)....


"Section 747.2006 - Review of Order Imposing Individual Minimum Capital Requirements (IMCR)"

"Section 216(k) of the FCUA provides that "material supervisory determinations, including decisions to require prompt corrective action, made... by [NCUA] officers other than the [NCUA] Board may be appealed to the [NCUA] Board" through an independent appellate process "pursuant to separate procedures prescribed by regulation".  Consistent with the requirement of section 216(k), decisions of NCUA staff to impose a discretionary supervisory action (including imposing individual minimum capital requirements on a credit union) would continue to be treated as "material supervisory determinations". Proposed 747.2006 would require that NCUA provide reasonable prior notice and an independent process for appealing NCUA staff decisions to impose individual minimum capital requirements (IMCR) under proposed 707.105."

It would appear that somebody is lying.  Take your choice, it's either...

H-m-m, let's see...

NCUA or NCUA ?