200 CUs would need more capital under proposal

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NCUA's proposed rule on capital would apply risk-based requirements on credit unions with more than $50 million in assets.

Jan. 24, 2014 – NCUA posted a calculator online to let individual credit unions determine how they would be affected by Thursday's proposed risk-based capital rule, which the agency says would require about 200 credit unions to hold more capital.

Out for a 90-day comment period, the proposed rule would apply risk-based requirements to credit unions with more than $50 million in assets. For these institutions, risk-based capital ratios would replace the current risk-based net worth provisions in the current rules. There would be 10 risk weight categories.

NCUA said credit unions can use the agency’s online calculator to find out how they would be affected, based on their most recent call report data. It estimates that more than 90 percent of credit unions subject to the new requirements would still be classified as well-capitalized.

NCUA Chairman Debbie Matz said any final rule would have an implementation period of more than a year.

NAFCU President and CEO Dan Berger said splitting the industry by asset size is inappropriate and will force some credit unions to shoulder more than their share of risk and responsibility for the safety of the National Credit Union Share Insurance Fund.

NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt also raised concerns. “We question whether the risk weights NCUA is proposing actually address risk to the system. Capital  should not be a substitute for proper management or examinations. ”

NAFCU is preparing a Regulatory Alert seeking members’ input.

 

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