1. Regulatory advocacy resources: cuna.org, select "legislative and regulatory advocacy"
2. Risk-Based Capital Action Center resources, including CUNA analysis, an archived webinar, FAQs, an ongoing blog, and a risk-based capital calculator: cuna.org/rbc
This provision would invite examiners to demand additional capital from credit unions continually, and potentially subject credit unions to even more scrutiny regarding their capital levels and capital strategies to balance their risks.
Of course, credit unions do routinely develop and implement strategies to maintain adequate capital. But addressing this issue as a regulatory requirement increases the likelihood that examiners will secondguess credit unions’ efforts and capital plans. NCUA has indicated that it will develop examiner guidance on this issue that would be available to credit unions, but rest assured, we’ll be covering this issue in our comment letter.
• Supplemental capital for RBC purposes. CUNA supports authority for all federally insured credit unions to use supplemental (secondary) capital for RBC2 purposes. Quite frankly, we believe NCUA should have included this provision in the new proposal.
While NCUA isn’t expanding supplemental capital authority under RBC2, the agency seeks comments on this issue. Credit unions should weigh in after considering these six questions:
1. Should NCUA include additional supplemental forms of capital in the risk-based capital ratio numerator, and how would including such capital protect the National Credit Union Share Insurance Fund from losses?
2. If you believe NCUA should include supplemental capital in the risk-based capital ratio numerator, what specific criteria should such additional forms reasonably meet to be consistent with GAAP (generally accepted accounting principles) and the Federal Credit Union Act (FCUA)—and why?
3. If NCUA allowed certain forms of certificates of indebtedness in the risk-based capital ratio numerator, what specific criteria should such certificates reasonably meet to be consistent with GAAP and the FCUA—and why?
4. In addition to amending NCUA’s risk-based capital regulations, what additional changes to NCUA’s regulations would be required to count additional supplemental forms of capital in NCUA’s risk-based capital ratio numerator?
5. For state-chartered credit unions, what specific examples of supplemental capital allowed under state law do you believe NCUA should include in the riskbased capital ratio numerator—and why?
6. What investor suitability, consumer protection, and disclosure requirements should be in place related to additional forms of supplemental capital?
NCUA formed an internal working group to focus on supplemental capital, and CUNA has reached out to work with that group as well.
• Goodwill in supervisory mergers. Unlike the agency’s initial proposal, RBC2 would allow a credit union to factor goodwill in a supervisory merger into its RBC calculation until January 2025.
Credit unions should consider two issues regarding NCUA’s treatment of goodwill. The agency has defined “supervisory merger” in a positive way, to include mergers in which the agency or a state regulator identified the continuing credit unions, and no actual assistance for the merger is necessary to meet the definition.
CUNA supports the definition. But we question whether it’s necessary to end the provision in January 2025. We’ll continue to discuss this issue with affected credit unions.
Working together for changes
Because CUNA does not agree that any RBC rule is necessary, we’re preserving all options as we continue to assess the proposal’s impact and our members’ views regarding the changes.
Two of the three NCUA Board members have already indicated their strong support for a new RBC rule, even as all three agency leaders urge credit unions to comment.
In light of that, CUNA will continue to listen to our members and seek improvements in RBC2, just as we did with the first proposal.
RBC2 and the improvements it contains are the direct result of the credit union system pulling together and engaging with Congress to accomplish a single objective: a much better RBC rule.
The second round of changes does not need to be as sweeping as the first. But collaborating again as we did before, we can improve RBC2 even more.
MARY DUNN is CUNA’s deputy chief advocacy officer and senior counsel for regulatory and executive branch affairs. Contact her at 202-508-6736 or at firstname.lastname@example.org.