Proposal is welcome development to state system

(July 23, 2021) NASCUS President and CEO Lucy Ito said the state system welcomes the proposal and that it will carefully analyze it and offer comments. “NASCUS has encouraged NCUA to consider adopting an off-ramp to the RBC rule that has an effect that is similar to the banking agencies’ CBLR,” she said.

The state system had strongly urged the agency to move forward on the CCULR, rather than adopt a proposed risk-based leverage ratio (RBLR) requirement. Ito said NASCUS was pleased the agency dropped the latter approach. “The RBLR approach may have created a perceived conflict with the new subordinated debt rule, by requiring the agency to modify the rule,” she said. “That could have put a damper on credit unions’ attempts to apply subordinated debt toward their capital calculations.”

But the proposed CCULR, she noted, would not require that change – and allow credit unions moving forward on subordinated debt to continue their plans. “The CCULR proposal allows both the 2015 RBC rule and subordinated debt rules to go into effect,” she said. “The optional nature of the CCULR would also permit parallel development of subordinated debt with the simultaneous implementation of the existing 2015 RBC rules, providing credit unions with the choice to opt in and out of the CCULR in the future.”