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NCUA Risk-Based Capital Rule Report Includes Legislative Recommendations

ALEXANDRIA, Va. (Nov. 23, 2015) – With the National Credit Union Administration’s risk-based capital rule now finalized, credit unions would benefit from changes Congress could make in the Federal Credit Union Act, the agency said.

NCUA today delivered a report (opens new window) to the House Financial Services Committee on the agency’s risk-based capital final rule. As outlined in H.R. 2769, the Risk-Based Capital Study Act of 2015, the report included legislative recommendations to improve the capital system for credit unions. NCUA recommended that Congress allow well-managed credit unions to issue supplemental capital that will count as net worth. NCUA also proposed technical changes to the current prompt corrective action statutory framework.

The 228-page report contains an analysis of the agency’s legal authority to require a two-tiered risk-based capital system, a comparison of credit union and bank risk weights, a discussion of the rationale for each of the risk weights and an overview of how the proposed rule would apply to credit union capital buffers.

NCUA Board Chairman Debbie Matz in October committed to completing the report outlined in H.R. 2769. The House Financial Services Committee passed the bill Sept. 30.

Approved by the NCUA Board at its October 2015 open meeting by a 2-1 vote, the risk-based capital final rule (opens new window) goes into effect Jan. 1, 2019. The final rule was approved after a comprehensive review of thousands of comments by lawmakers and credit union system stakeholders during two separate comment periods. The scope of the new rule covers 24 percent of credit unions—complex credit unions with assets above $100 million—that hold 90 percent of the systems assets.

NCUA hosts an online Risk-Based Capital Rule Resources Center with extensive information about the rule, including a risk-based capital estimator tool for credit unions to assess the rule’s impact on their operations and a video (opens new window) about the final rule.