RBC2: A Penny for Your Thoughts
Â Written by Alicia Nealon, Director of Regulatory Affairs
In case you didnÃ¢ÂÂt see, RBC2 was published in Federal Register last week, and the comment deadline has been set for April 27th.Â With that in mind, we are launching a series of posts where NAFCUÃ¢ÂÂs Compliance Blog will break down different portions of the proposal and highlight the key issues that we are looking for your feedback on. Â TodayÃ¢ÂÂs topic is the proposed definition of Ã¢ÂÂcomplex credit union.Ã¢ÂÂ
RBC2 would, among other things, change the definition of Ã¢ÂÂcomplex credit union,Ã¢ÂÂ for the purposes of NCUAÃ¢ÂÂs capital requirements.Â The Federal Credit Union Act directs NCUA to base its definition of Ã¢ÂÂÃ¢ÂÂcomplexÃ¢ÂÂÃ¢ÂÂ credit unions Ã¢ÂÂÃ¢ÂÂon the portfolios of assets and liabilities of credit unions.Ã¢ÂÂÃ¢ÂÂÂ Under the current rule, credit unions are Ã¢ÂÂÃ¢ÂÂcomplexÃ¢ÂÂÃ¢ÂÂ and subject to the risk-based net worth requirement only if they have quarter-end total assets over $50 million and they have a risk based net worth requirement exceeding 6%.Â RBC2, however, would define the term Ã¢ÂÂÃ¢ÂÂcomplexÃ¢ÂÂÃ¢ÂÂ credit union using a single asset size threshold of $100 million as a proxy for a credit unionÃ¢ÂÂs complexity.Â In other words, RBC2 would establish a bright-line $100 million asset threshold to determine whether a credit union is complex for the purposes of NCUAÃ¢ÂÂs capital requirements.
What does everyone think? Does your credit union agree that a bright line asset threshold of $100 million is an appropriate method of defining Ã¢ÂÂcomplex credit union?Ã¢ÂÂ Or does your credit union believe the definition of Ã¢ÂÂcomplexÃ¢ÂÂ should actually consider a credit unionÃ¢ÂÂs portfolios of assets and liabilities? In others words, would your credit union rather a bright-line asset threshold, or a review of the products and activities that your engaged in?
As you consider these questions, be sure to take a look at NAFCUÃ¢ÂÂs Regulatory AlertÂ 15-EA-02, our Capital Reform Issue Page, or reach out to me directly (firstname.lastname@example.org, 703-842-2266) with your thoughts.Â