NCUA’s much-anticipated risk-based capital proposal was published in the
Federal Register Thursday morning, starting the clock on a 90-day comment period for credit unions and associations/leagues.
Both the Credit Union Association of New York and CUNA are soliciting credit union feedback on the critical proposal. The Association emailed all member credit union leaders the link to a statewide survey earlier this week.
Notably, the proposal would:
cover credit unions with assets of more than $50 million;
restructure NCUA’s current Prompt Corrective Action (PCA) regulation to involve calculation of a capital-to-risk assets ratio that is comparable to Basel III for community banks, although the risk weights would be substantially different;
require a well-capitalized credit union to maintain a 7 percent net worth ratio (unchanged from the current PCA system) and a new, 10.5 percent risk-based capital ratio;
change many of the effective risk weights for most of NCUA’s current asset classifications;
set higher risk weights and higher capital requirements for credit unions with higher concentrations of assets in real estate loans, member business loans, longer-term investments and some other assets;
authorize the agency to require even higher capital on a case-by-case basis; and
set further restrictions on the ability of a credit union to pay dividends.
Credit union leaders can determine how the proposal would affect their net worth/capital using
NCUA’s online calculator.