Credit Union Regulator Delays Higher Capital Requirement to 2022
The National Credit Union Administration (NCUA) proposed last week to delay the effective date of its risk-based capital rule until January 1, 2022. The rule would generally require larger credit unions, with assets more than $500 million, to increase their capital requirements.
“This is an appropriate time to consider additional improvements to the risk-based capital rule,” said NCUA Board Chairman Rodney E. Hood. “We have a strong economy, and credit unions are very well-capitalized, with a net worth above 11 percent. As a regulator and steward of the National Credit Union Share Insurance Fund, I am committed to a system of prudent capital standards as required by the Federal Credit Union Act.”
The risk-based capital rule was initially proposed in January 2014. After receiving more than 2,000 public comments, NCUA issued a revised rule in October 2015, which required the rule’s provisions to go into effect in January 2019. A few months before the effective date, NCUA held its first vote to delay implementation to 2020. This most recent proposal marks the second time the NCUA has voted to delay the rule’s implementation.
The NCUA Board voted 2-1 to approve the latest proposal, with the Board’s only Democrat, Todd Harper, dissenting. Delaying the rule “will produce consequences for the entire credit union system,” said Harper. “Do we really need a full decade to holistically and comprehensively evaluate capital standards?”
In contrast, credit unions generally praised NCUA’s proposal. Dan Berger, CEO of the National Association of Federally-Insured Credit Unions (NAFCU), commended the delay and expressed concern over the regulatory costs associated with the rule. “NAFCU remains concerned about the regulatory burdens and costs the rule will place on credit unions,” said Berger. NAFCU “will continue to encourage the agency to design a true risk-based capital system for credit unions.”
Those interested in commenting on the proposed rule will have 30 days once the proposal is published in the Federal Register.