Removing Barriers Blog

Two Comments Filed with NCUA: RBC Simplification and CAMELS Rating System
Posted May 10, 2021 by CUNA Advocacy

Today, we filed a comment letter in support of the NCUA’s CAMELS proposal to add an “S” (Sensitivity to Market Risk) component to the existing CAMEL rating system and redefine the “L” (Liquidity Risk) component. The rule does not add any substantive requirements or impose additional costs and the amendments would also enhance consistency between the regulation of credit unions and other financial institutions. We support the proposal, as we agree that the addition of the “S” component would likely enhance transparency and make it easier to distinguish between liquidity risk and sensitivity to market risk. 

We also filed a letter in response to the NCUA’s ANPR that suggests two approaches to improve the RBC rule: replace it entirely with a Risk-Based Leverage Ratio; or keep the RBC rule but give complex credit unions the option to instead comply with a Complex Credit Union Leverage Ratio, which would be modeled after the Community Bank Leverage Ratio. The first option would likely require more capital than the RBC rule. We believe the second approach makes more sense since it will give credit unions more flexibility in which option they wish to adhere to.