COMMENTS FROM NASCUS PRESIDENT AND CEO LUCY ITO ON KEY RESULTS OF JAN. 14, 2021 NCUA BOARD MEETING

Jan. 14, 2021

CONTACT: Lucy Ito, NASCUS president and CEO; lito@nascus.org; (703) 528-8351

On proposed simplification of risk-based capital requirements
‘Careful review necessary – and consultation with states required by law’

The Federal Credit Union Act (FCUA) requires NCUA to consult and cooperate with state supervisors on prompt correction action and capital adequacy issues, and we expect the agency to meet its lawful obligation. As for the proposal itself, both approaches outlined by the agency represent significant changes to how federally insured credit unions will meet capitalization requirements. The approaches include trade-offs that credit unions must weigh thoroughly, but also offer the potential for significant flexibility. NASCUS urges all of its members, both regulators and credit unions, to study this proposal carefully and offer input to us as we prepare our own feedback to the agency on the proposal.

On proposal to include the ‘S’ component in the exam rating system (CAMELS)
‘Applause for the NCUA Board – let’s move forward quickly to finalizing’

The state system praises the NCUA Board for moving forward on expansion of the rating system to include the “S” component, matching the standard already used by 24 states (and long advocated by NASCUS for NCUA). We’re almost at the finish line – but we are willing and able to keep working with the agency to complete the process, and see this change made in time to be effective in 2022. The state system is driving toward this goal out of a desire to have consistent standards set across the credit union system, and to reduce risk. For some time, state examiners have observed that the extended low-yield environment may encourage greater risk taking by financial institutions. We urge the agency to finalize this proposal as soon as possible following the comment period and as soon as practicable following necessary technical re-programming.