The NCUA board on Thursday approved a final plan to delay implementation of the agency's Risk-Based Capital requirement for one year and to increase the threshold for credit unions that must comply with it.
Under the plan, the effective date of the rule will be Jan. 1, 2020, rather than the Jan. 1, 2019 deadline the board originally set.
And the threshold for credit unions that must comply with the rule is increased from $100 million to $500 million. That increase would exempt an additional 1,026 credit unions from having to comply with the rule, agency officials said.
“I think the one-year delay is generous,” NCUA Board Chairman J. Mark McWatters said. “I think one-year is the proper balance.”
He acknowledged that increasing the threshold would pose an additional risk to the Share Insurance Fund.
“It does increase the risk,” he said. “But you also have regulatory relief.”
He added that he believes the rule does not pose a safety and soundness issue for the credit union system.
Board member Rick Metsger agreed, saying that the delay also gives the NCUA board additional time to explore the issue of alternative capital for credit unions.
House Republicans have been pushing legislation that would impose a two-year delay for the rule, but the Senate has not considered that legislation.
NAFCU will continue to push for a two-year delay, association President/CEO B. Dan Berger said.
“We remain concerned about the regulatory burdens and costs the rule will place on credit unions,” he said. “NAFCU will continue to advocate for Congress to delay the rule's implementation by two years in order to give the NCUA time to revise it.
CUNA officials have said they support the delay in order to give the board additional time to work on the issue. They have said they do not believe the rule is needed.
“While CUNA supports a longer delay and other substantive modifications to the rule, the proposal's changes are important and will provide relief, and NCUA deserves credit for this targeted regulatory relief,” CUNA Chief Advocacy Officer Ryan Donovan said.
At its meeting, the board also approved a proposed rule that would update bylaws that credit unions must use. NCUA officials said that the proposal would update, clarify and simplify credit union bylaw.
The proposal also would provide guidance to credit unions through staff commentary included in the plan.
Agency officials said that some credit unions want to be permitted to craft their own bylaws.
“The board continues to believe that having a uniform set of [bylaws] is more consistent with the spirit of the [Federal Credit Union] FCU Act and is necessary to protect fundamental member rights, to avoid confusion among FCUs, and to prevent the adoption of illegal bylaw provisions,” the agency said, in explaining the proposal.
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