ARLINGTON, Va.–When NAFCU hosts its annual CEO and Senior Executives Conference in Key West, Fla., this week, the meeting will reflect two signs of the times: it’s being held as a hybrid virtual/in-person event, and there will be a focus on capital-related issues due to the stimulus.
Andrew Morris, senior counsel for research and policy with NAFCU, noted there has been growing interest—and for obvious reasons—in “capital-related issues” and net worth ratios given the influx of member deposits following the stimulus payments to Americans over the past year.
“And it’s being made even more relevant by the fact we have new risk-based capital-related rules going into effect next year,” noted Morris, who spoke to CUToday.info on the same day the trade group filed its comment letter with NCUA on its advanced notice of proposed rulemaking (ANPR) related to risk-based capital.
‘Complicated and Onerous’
Morris noted that NAFCU sees the ANPR as an opportunity for the agency to simplify what he called a “complicated and onerous” risk-based capital rule.
Pointing out there are a number of capital-related proposals on the NCUA docket, including around flexibility and the threshold to be defined as a large credit union, Morris said NCUA appears to have to options with its risk-based capital proposal.
The first is to scrap the risk-based capital leverage ratio entirely and start over.
The second is more closely related to the “off ramp” the banking regulators already have in place, provided the “unique features of credit unions is taken into account,” said Morris.
‘Easiest Thing to Do’
The latter plan would not require a complete rewrite of NCUA’s rules. “At least from our perspective, that would be the easiest thing to do and would provide for fewer administrative hurdles.”
Morris noted NCUA has said it wants to get some type of capital-relief rules into place before the risk-based capital rules go into effect, which means the agency will need to move quickly.