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Fryzel discusses “right sizing” risk-based capital rules at AACUL Winter Meeting

 National Credit Union Administration (NCUA) Board Member Michael E. Fryzel discussed a changing regulatory landscape and called for “right sizing” the agency’s rules on risk-based capital.

Fryzel spoke to more than 110 credit union league presidents, board chairmen, and government affairs professionals at the American Association of Credit Union Leagues’ 2013 Winter Meeting.

“Risk-based capital, properly formulated, should match up with the real-world activities of a credit union,” Fryzel said. “Greater net worth might be necessary, depending on the type of activities that credit unions pursue as they serve their members. I advocate neither an overly stringent nor an overly permissive approach. I advocate ‘right sizing’ NCUA’s risk-based rules.”

NCUA announced, this summer, that the agency is working to propose a new risk-based capital framework tailored to protect the industry and consumers from losses.

“A credit union’s function is serving customers’ financial needs, which by definition carries risk,” Fryzel said. “I want NCUA to recognize that risk, not as an extraordinary characteristic that should be avoided, but as part of doing business as a provider of financial services in the 21st century. I want to see standards that are as minimal as possible and as much as necessary. I will be keeping this vision in mind as NCUA considers changes to the industry’s risk-based capital rules.”