NCUA’s proposal to raise the asset threshold for defining a credit union as “complex” for risk-based capital purposes will provide relief to a significant number of credit unions, CUNA wrote to the agency Wednesday. Under the proposal any risk-based net worth requirement would apply only to a credit union with assets that exceed $500 million and a risk-based net worth requirement that exceeds 6%, an increase from the current threshold of $50 million.

“We support this proposed rule, as we agree with the NCUA that implementing this regulatory change in advance of the risk-based capital rule’s January 1, 2022, effective date will provide capital relief to a significant number of credit unions without substantially decreasing the safety and soundness of credit unions or the National Credit Union Share Insurance Fund (NCUSIF),” the letter reads.

CUNA agrees with NCUA’s analysis that the proposal would provide immediate relief for 67 credit unions that must currently manage their capital levels to a risk-based net worth requirement above 7%. It would also allow many credit unions with assets of between $50 million and $500 million to “expand their portfolios and simple manage their capital levels to meet the 7% leverage requirement to be well capitalized.”

The letter also calls on NCUA to utilize its authority to maximize regulatory flexibility for credit unions in ways that does not jeopardize safety and soundness.

“Further, it is important that credit unions, as America’s first financial responders, employ their capital in ways to satisfy members’ needs as we rebuild the economy following the COVID-19 pandemic,” the letter reads. “We applaud the NCUA for its creative and proactive approach over the past year in pursuing regulatory relief aimed at helping credit unions help their members. We believe increasing the complex threshold under the proposal is another step in the right direction.”