Removing Barriers Blog

NCUA Proposes to Delay RBC Rule
Posted June 20, 2019 by CUNA Advocacy

Today, the NCUA Board addressed a single item during its June meeting. During the two-hour meeting, Board members raised a range of issues for and against delaying the effective date of the risk-based capital (RBC) rule. Chairman Hood recognized and thanked members of the MD/DC Credit Union Association and Cooperative Credit Union Association for their attendance at today’s meeting.

Proposed Rule – Risk-Based Capital (Part 702)

In a 2-1 vote, with Board member Harper opposing, the Board issued a proposed rule that would delay the effective date of the RBC rule until 1/1/2022; the current effective date is 1/1/2020. “This proposed delay would allow the Board additional time to holistically and comprehensively evaluate the NCUA’s capital standards for federally insured credit unions.” During the extended delay period, the NCUA’s current Prompt Corrective Action (PCA) requirements would remain in effect. 

In the additional time provided by the proposed delay, the Board would examine whether asset securitization, and subordinated debt should be addressed, and whether a community bank leverage ratio analog should be integrated into the NCUA’s capital standards. In regard to subordinated debt, Chairman Hood committed the Board to consider a proposed rule on the topic before the end of 2019.

In voting in support of the proposed rule, Chairman Hood expressed his strong support for maintaining capital standards that are “effective, not excessive, and are well calibrated to the risks in the credit unions [the NCUA] insures.”

“After a decade of work on a new RBC regime, the Great Recession, and the recent taxi medallion credit union failures, it is time for us to move ahead,” according to Board member Harper, who voted against the proposal. He further stated that “a further delay is bad policy in [his] view because the existing risk-based net worth requirement is ineffective . . . .”

The NCUA will accept public comments for 30 days following publication of the proposed rule in the Federal Register.