NAFCU, NASCUS Endorse Delay of Risk-Based Capital Rule
The organizations say more time is needed and the rule needs to be fine-tuned.
Credit union trade groups continue to support the NCUA’s decision to delay implementation of its Risk-Based Capital rule and say the additional time should be used to further revise it.
NAFCU and NASCUS told the agency Friday that the delay is needed, and the rule should be fine-tuned.
As originally adopted, NCUA planned to institute a risk-based rule for credit unions with more than $100 million in assets. The rule was scheduled to go into effect next year. However, that plan drew opposition from some House members as well as credit unions.
Those House members included a two-year delay in the rule in several pieces of legislation, but none have been enacted so far.
The NCUA board last month proposed a one-year delay and increased the threshold for compliance to $500 million. Under the proposal, the Risk-Based Capital rule would go into effect in 2020.
Comments on the proposed rule were due Friday. CUNA has said the rule is not needed at all.
In NAFCU’s comment letter, President/CEO B. Dan Berger wrote that Congress should enact legislation to provide credit unions with a “modern capital regime.” In addition, the RBC rule should be significantly revised or withdrawn, he said.
Berger also said that for credit unions that are deemed complex, NCUA can “utilize its supervisory authority to exempt, on a case-by-case basis, credit unions whose net worth ratio provides adequate protection from material risks irrespective of asset size.”
In NASCUS’s comment letter, General Counsel Brian Knight said the delay in implementation is needed.
That time should be used to address the issue of supplemental capital, he said.
The trade group supports the increased threshold, he said. However, he said that an asset threshold oversimplifies the complexities of a credit union’s balance sheet, he added. That could result in a larger number of credit unions being covered by the rule, according to Knight.
NASCUS said that the NCUA should work with state regulators to develop a better definition of complex and to develop a framework for supplemental capital.