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The NCUA Board Thursday is set to finalize its proposed 2020-2021 budget and issue a final rule to delay the implementation of its risk-based capital (RBC) rule. The board will also receive a briefing on the normal operating level (NOL) for the 2020 National Credit Union Share Insurance Fund (NCUSIF).

2020-2021 budget

As proposed, the NCUA's 2020 and 2021 budgets estimate $316.2 million and $325.9 million in spending, respectively. The agency's proposed 2020 operating budget represents a 57 percent increase in the NCUA's budget over the past decade, while the industry has seen a 32 percent reduction over the same period.

During testimony on the proposed budgets last month, NAFCU Chief Economist and Vice President of Research Curt Long commended the agency on its efforts to promote efficiency in its daily operations and longer-term projects and suggested ways to improve accountability, specifically through cost-benefit analysis of NCUA programs as well as rules.

NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt reiterated NAFCU's commitment to ensuring the NCUA properly manages credit union funds throughout the budgeting process in an op-ed published in Credit Union Journal.

Risk-based capital

The NCUA Board in June moved forward with its proposal to further delay the implementation date of its RBC rule to Jan. 1, 2022; its current effective date is Jan. 1, 2020. NAFCU has previously shared several recommendations for the board to consider and has urged the NCUA to work with Congress to amend the Federal Credit Union Act to achieve "comprehensive capital reform."

In a letter to lawmakers earlier this week, NAFCU Vice President of Legislative Affairs Brad Thaler reiterated NAFCU's concerns and recommendation that the NCUA permanently grandfather "excluded goodwill" and "excluded other tangible assets" in the RBC calculation.

Additionally, NAFCU has led efforts to ensure credit unions and their members benefit from a modern capital regime, working closely with policymakers on Capitol Hill and at the NCUA. Following the enactment of S.2155, which made changes to bank capital, NAFCU President and CEO Dan Berger encouraged the NCUA to "consider its entire rulemaking anew." Furthermore, a NAFCU-backed provision to delay the rule by two years from its original implementation date passed the House three times in 2018.

2020 NCUSIF NOL

NAFCU has continuously advocated for the NCUA to reset the NCUSIF NOL to the historical level of 1.3 percent – the only trade association to do so – so that credit unions may realize the fullest distribution. Earlier this year, NCUA Chairman Rodney Hood told the House Financial Services Committee that he would like to return the NOL to 1.3 percent.

In May, more than 5,5000 credit unions received $160.1 million in equity distributions from the NCUSIF, following the agency's reporting of an equity ratio of 1.39 percent at the end of 2018, which was above the board-approved NOL of 1.38 percent. 

The NCUA Board received an update on the NCUSIF quarterly report during its November meeting. 

NAFCU will attend next week's meeting – the last of the year – and update credit unions via NAFCU Today. View the board's 2020 meeting dates.