NCUA Board Chairman Debbie Matz announced Monday she willpropose a revised risk-basedcapital rule, due to the significant structural changescurrently being considered. The revised rule would trigger a newcomment period.

“I have always said that another comment period would only beappropriate if we decide to make significant structural changesthat would exceed the parameters of the Administrative ProcedureAct,” Matz said in a statement. “Even though the changes we aredeveloping would pose less of a regulatory burden than the originalproposal, some changes would affect the rule's structure. Based ondiscussions with NCUA's General Counsel, I now believe it isprudent under the APA to ask for additional comments.”

Matz also said the revised proposal will include a longerimplementation period as well as different risk weights formortgages, investments, member business loans, CUSOs and corporatecredit unions, as well as other changes.

NCUA Board Member Rick Metsger said the board is moving towardseparating interest rate risk and credit risk in the proposal,which would warrant what is essentially a second comment period.

“As I have often said, I believe interest rate risk is importantand must be addressed in the risk-based capital rule, but it shouldbe addressed separately from credit risk. Weighting credit risk andinterest rate risk with a single numerical value created conflictsthat ultimately made it difficult to accurately weigh the risk ofeither,” Metsger said on Monday.

“I am pleased we appear to be moving in the direction ofseparating interest rate risk and credit risk and that structuralchange alone is sufficient for me to believe an additional commentperiod would be appropriate,” he added.

According to Matz, the NCUA Board might present the amendedrisk-based capital proposal before the end of the year. Metsger said the revisedproposal has not been drafted yet.

“I believe that when people do review it, they will concludethat we have both listened to—and heard—the comments that weresubmitted during the initial comment period. Those who weighed inthoughtfully on the original proposal will see the agency has beenresponsive to fact-based analysis,” Metsger said.

Immediately following the announcement, the NCUA said BoardMember Mark McWatters would not make a statement on the decision,but the new board member released a statement late Monday.

“I am pleased that the chairman has agreed to a new commentperiod for the proposed risk-based capital rules. As I stated lastweek, I will not consider the rules for adoption unless they arere-proposed with a robust comment period of not less than 60 to 90days. I articulated this position out of respect for Congress andthose members of the credit union community who haveenthusiastically voiced their opposition to the proposed rules,” hesaid.

“That said, the previously proposed risk-based capital rules aredeeply flawed and merit substantial revision. The devil is in thedetails, and I await the details before I can pass judgment on thenext draft of the proposed rules,” he added.

Former NCUA Board Member Michael E. Fryzel, now an attorney inChicago, applauded the revised rule.

“The decision by Chairman Matz to call for a second commentperiod on the proposed risk-based capital rule was proper andcorrect. I applaud her for making that decision and announcing itnow so everyone's focus can be directed to the rule itself andgetting it right for the regulator and the regulated,” he wrote inan emailed statement.