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Reg Alert details NCUA RBC proposal, potential impacts on CUs
In a new Regulatory Alert sent Friday, NAFCU detailed the NCUA's recently issued advanced notice of proposed rulemaking (ANPR) related to risk-based capital (RBC) and its potential impact on credit unions. The NCUA Board approved the ANPR, in a 2-1 vote, during its January meeting and is currently seeking feedback on simplification of the rule, scheduled to take effect in 2022.
The NCUA in 2019 approved delaying the implementation of its RBC rule by two years to Jan. 1, 2022, and 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 agency.
Through the alert, NAFCU highlights the ANPR proposes two different approaches for simplifying the RBC rule, which include:
- replacing the RBC rule with a risk-based leverage ratio (RBLR), which uses risk attribute thresholds to define “complex” credit unions; and
- adopting a complex credit union leverage ratio (CCULR) which would leave the 2015 RBC rule unchanged but allow eligible complex federally-insured credit unions to opt-in to the CCULR to meet the RBC requirements.
The alert also includes an in-depth section-by-section analysis and poses questions for credit unions to consider.
Access the Regulatory Alert here. Comments on the ANPR are due to NAFCU March 1; comments are due to the NCUA 60 days after publication in the Federal Register.
NAFCU supports amendments to the RBC rule and has asked the agency to adopt a community bank leverage ratio, similar to the CCULR included in the ANPR. The association has also previously requested that the NCUA permanently grandfather "excluded goodwill" and "excluded other tangible assets" in the RBC calculation and will continue to encourage the agency to design a true risk-based capital system for credit unions.
In a recent post on the association's member-only CFO Network, NAFCU Chief Economist and Vice President of Research Curt Long provided background on the RBC rule and outlines how both approaches included in the ANPR would affect credit unions.