Newsroom

NAFCU is seeking members' feedback on the NCUA's proposal to amend its regulations governing corporate credit unions and the scope of their activities. Association members can provide comments via NAFCU'sRegulatory Alert.

Specifically, the proposed amendments revise provisions on retained earnings and Tier 1 capital to include "GAAP equity acquired in a merger" as a component of retained earnings.

Comments on these issues are due to NAFCU by Aug. 16 and to the NCUA by Sept. 1.

Released during the NCUA Board's June 23 open meeting, the proposed rule would primarily affect the calculation of capital after corporates consolidate and set a retained earnings ratio target in meeting prompt corrective action standards. The changes would align post-consolidation retained earnings with generally accepted accounting principles by incorporating GAAP equity acquired in a merger as a component of retained earnings. Retained earnings are a component of Tier 1 capital, so the latter would change as well.

NCUA says the changes would, among other things, provide transparency in corporate credit unions' presentation of their capital adequacy.

NCUA last revised the corporates' regulatory framework in 2010 in response to the fallout from the financial crisis, which included the failure of five large corporate credit unions with investments in faulty mortgage securities.

The corporate system has significantly contracted and consolidated since the 2010 rule went into effect. Before that rule, there were 26 corporates with an aggregate $81.7 billion in assets. As of March 31,there are 11 corporates with an aggregate $24.9 billion.