WASHINGTON — NCUA Board Chairman tried to advance the idea ofrisk based capital reform for credit unions during a Mar. 4 hearingbefore the Senate Committee on Banking, Housing and UrbanDevelopment.

The Committee had called the hearing to inquire into the healthof the U.S. Banking industry during the current difficulties in thecredit, housing and mortgage events.

Johnson's 24 pages of prepared comments for the hearing soughtto walk the narrow line between acknowledging the rough economicenvironment in which credit unions find themselves and reassuringthe Committee about their safety and soundness.

But once her prepared comments were done, the rest of thehearing's questions centered on issues surrounding banks andbankers and carried little relevance for credit unions. Senatorsexpressed concern about a wide variety of questions, including theimplementation of capital standards and whether the new BASEL IIcapital regulation system, which is gradually being implemented inthis country but which is more advanced in Europe, would havehelped or hurt banks struggling through the current economicsituation.

Johnson's risk based capital answer came when she assertedherself in response to a general question about those BASEL IIcapital standards.

“I'd like to answer that,” Johnson said, stepping into aquestion from Committee Chairman Christopher Dodd (D-Conn.) onBasel II which appeared headed to Comptroller of the Currency JohnDugan. “While credit unions don't fall under Basel, we do have arisk based capital proposal on the table for Congress to take alook at. I would ask your serious consideration. This would give usa real tool as a regulator to identify problems more quickly and itwould help credit unions manage their risk more effectively. Andit's our risk based capital prompt corrective action proposal thatwe have been working three years on it and I would ask yourconsideration.”

Chairman Dodd made no response and the conversation stayedfirmly fixed on bank issues for the rest of the hearing.