Proposed Risk-Based Capital Rule Has One-Year Delay

Ninety percent of federally insured credit unions would be exempt from the NCUA’s risk-based capital rule, and covered credit unions would have an additional year to prepare, under a proposed supplemental rule (Part 702) approved by the Board.

“The proposed changes to the risk-based capital rule, reached through a collaborative and bi-partisan process, if finalized, would allow the agency to provide federally insured credit unions with a measure of regulatory relief without impairing the safety and soundness of the National Credit Union Share Insurance Fund,” NCUA Board Chairman J. Mark McWatters said.

“This proposed rule is a substantive solution, not just another delay,” Board Member Rick Metsger said. “It will give the agency time to finalize its systems and give the handful of complex credit unions who do not have adequate risk-based capital time to raise capital or adjust their balance sheets to achieve compliance and protect their members. This proposed rule continues the NCUA’s tradition of nonpartisan problem-solving. Most importantly, it will better position the Share Insurance Fund, and the system, for the next set of challenges they face.”

The proposed rule would delay the current effective date of the risk-based capital rule approved in October 2015 to Jan. 1, 2020. The current effective date is Jan. 1, 2019.

The proposed rule also could raise the current $100 million asset threshold for defining a complex credit union to $500 million. As a result, 90 percent of credit unions—based on Dec. 31, 2017, Call Report data—would be exempt from the rule. Under the proposed rule, more than 98 percent of all complex credit unions would be considered well-capitalized.

If the rule is finalized, during the one-year delay, the NCUA’s current prompt corrective action requirements would remain in effect.

Comments on the proposed rule, available online here, must be received within 30 days of publication in the Federal Register.