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Feb. 13, 2014 – NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt told CU Journal that NCUA's public risk-based capital calculator could cause confusion and undue damage to credit unions' reputations if the data it shares is misunderstood.

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

"We certainly have concerns about reputation risk, because someone, outside credit unions, may not really understand what they are looking at," Hunt said.

Hunt said the calculator could be valuable for credit unions but could have unintended consequences. "Risk-based capital and risk weighting are very complex issues, and NCUA may have oversimplified [via the calculator] what this rule does, making it easy for people who don't know the rule to make wrong assumptions," she said.

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.

NAFCU Chief Economist David Carrier estimated that credit unions with more than $50 million in assets will have to hold $6.3 billion more in additional reserves to achieve their current capital cushion level if the rule is adopted. NAFCU has published a Regulatory Alert seeking members' input on the rule, which will be out for a 90-day comment period when it is published in the Federal Register.