NASCUS Submits Comment Letter to NCUA on Capital Adequacy

NASCUS Submits Comment Letter to NCUA on Capital Adequacy: The Complex Credit Union Leverage Ratio, Amendments to Risk-Based Capital, and Other Technical Amendments
October 15, 2021

ARLINGTON, VA — The National Association of State Credit Union Supervisors (NASCUS) submitted a letter in response to the National Credit Union Administration’s (NCUA’s) request for comments on Capital Adequacy (RIN 3133-AF12), a proposed rule to create a Complex Credit Union Leverage Ratio (CCULR) and make other amendments to the 2015 Risk-Based Capital rule (RBC rule).

NASCUS believes that a safe, sound and simplified alternative to calculating a risk-based capital ratio as an option for qualified credit unions is sound public policy. In the past, NASCUS has proposed consideration for a streamlined alternative to the risk-based capital (RBC) framework comparable to the Community Bank Leverage Ratio (CBLR) published for banks. NASCUS supports the proposed rulemaking and encourages quick action to finalize the proposal with modest changes so it may take effect concurrently with the RBC rule on January 1, 2022.

NASCUS commends NCUA for continuing to refine the risk-based capital regulatory framework to an improved, more robust, and more operable than the initial January 2014 proposal. However, NASCUS believes further improvements can be made to the RBC and subordinated debt frameworks.

For example, permitting subordinated debt to be used in calculating net worth for the CCULR thresholds is not incongruous with the FCUA and would be comparable to the CBLR. Additionally, we believe complex credit unions can appropriately manage the optionality regarding both entering and existing the CCULR on par with community bank flexibility entering and exiting the CBLR.

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To read the NASCUS Comment Letter in its entirety, please click here. (This is a member-only link.)

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