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December 13, 2019

NCUA Board approves RBC delay, proposed budgets

NCUAA win for credit unions, the NCUA Board Thursday passed a final rule to delay the implementation of its risk-based capital (RBC) rule by two years to Jan. 1, 2022. The board also voted to pass the agency's 2020 and 2021 budgets.

NAFCU has led efforts to ensure credit unions and their members benefit from a modern capital regime, working closely with policymakers on Capitol Hill and at the NCUA. The association has also requested that the NCUA permanently grandfather "excluded goodwill" and "excluded other tangible assets" in the RBC calculation and will continue to encourage the agency to design a true risk-based capital system for credit unions.

"Today, the credit union industry remains well-capitalized, manages risk well, and has proved resilient in light of the bank-led financial crisis of 2008," said NAFCU President and CEO Dan Berger on the delay. "We appreciate NCUA Chairman Rodney Hood's and Board Member J. Mark McWatters' commitment to ensuring credit unions benefit from an appropriate, modern capital regime by providing further review of the agency's risk-based capital rule.

"While the NCUA reviews its rulemaking, NAFCU strongly urges the agency to consider its rulemaking anew and assess risk based upon a credit union's specific business practices as opposed to an arbitrary asset threshold," Berger added.

During the delay period, the NCUA's current prompt corrective action requirements would remain in effect. The agency has indicated it will also consider NAFCU's recommendation to provide credit unions with parity to changes made to bank capital under the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155). NAFCU has urged the NCUA to consider the impact of the current expected credit loss (CECL) standard as it reviews the RBC standard as well.

Also at Thursday's NCUA Board meeting:

  • 2020 and 2021 budgets: The board, in a 2-1 vote, approved the operating budgets for 2020 and 2021 largely as proposed, with a reduction of $330,000, for a revised total of $315.9 million for the 2020 budget. Board Member Todd Harper's recent proposal for a consumer compliance exam program was not included in the final budget. Of note, federal credit unions will fund 70 percent of the agency's 2020 operating budget, and federally-insured, state-chartered credit unions will fund 30 percent. NAFCU has previously suggested ways for the agency to improve transparency in the budgeting process.
  • 2020 National Credit Union Share Insurance Fund (NCUSIF): During the board briefing on the normal operating level (NOL) for 2020, agency staff indicated that the NOL will remain at 1.38 percent. NAFCU will continue to advocate for the NCUA to reset the NOL to the historical level of 1.3 percent – and has been the only trade association to do so – so that credit unions may realize the fullest distribution.

The board will next meet Jan. 23, 2020. Here’s the full list of their 2020 meeting dates.