ARLINGTON, Va. – The National Association of State Credit Union Supervisors (NASCUS) is calling on NCUA to delay its risk-based capital rule, saying aspects of the rule remain “problematic.”
NASCUS’ views were shared in the group’s comment letter on the agency’s risk-based capital proposal.
“In some respects, delay of the effective date of the rule might disappoint those credit unions that have spent the past two years preparing to manage their balance sheets to the new regulatory framework, as well as those that have awaited the supplemental capital rulemaking NCUA assured would be completed prior to the effective date of risk-based capital,” NASCUS Executive Vice President and General Counsel Brian Knight wrote in the association’s official comment letter on the proposal. “However, supervisory guidance has yet to be issued to examiners and industry to assist in implementing the rules and uncertainty remains related to fields 22-46 on the 5300 Call Report intended to capture risk-based capital related information.”
Calling for a supplemental capital rule, Knight added in the letter, “NCUA has the authority to define the elements of the risk-based capital ratio” and that including supplemental capital in the risk-based capital numerator could “help protect the National Credit Union Share Insurance Fund from losses by encouraging credit unions to attract additional loss-absorbing forms of capital that they would otherwise forego.”
NASCUS said it and its state regulator members are seeking to work with NCUA to ensure any final rules are “effective and efficient.”
Overall, NASCUS said its comment letter touches on six significant areas:
- NCUA should delay the risk-based capital implementation and use the additional time to issue a supplemental capital rule simultaneously
- NCUA should consult and cooperate with state regulators on the prompt corrective action aspect of the risk-based capital final implementation and supplemental capital rulemaking
- NASCUS supports raising the complex credit union asset threshold
- Changes are needed to the Original Complexity Index (OCI)
- NCUA should consider developing an “off-ramp” for complex credit unions that choose to hold higher capital
- NCUA should revisit the risk weightings during the delay in the effective date