Banks Take Second Look At RBC Requirements; So Should Credit Unions

August 23, 2017 at 8:56 am Leave a comment

Yesterday, the FDIC, the Federal Reserve Board and the OCC released a technical proposal that could indirectly help credit unions by buttoning the case for further reducing the number of credit unions slated to be subject to NCUA’s risk based capital rules.

Starting on January 1, 2019, credit unions with 100 million or more assets have to comply with the risk based capital requirements. NCUA implemented these more complex requirements in reaction to a series of similar reforms undertaken by the larger banking industry. Since 2013, banking regulators have been phasing in new risk grading requirements. For example, starting on January 1, 2018, there are scheduled to be new limits placed on the amount of mortgage servicing assets that can count towards an organization’s risk based capital requirements. Tuesday’s announcement is the latest and strongest signal that risk based capital requirements will be scaled back for smaller institutions.

Why does this matter you ask? Because Chairman McWatters has in the previously expressed skepticism about the utility of NCUA’s risk based capital requirements. Furthermore, NCUA originally argued that it had to make these proposed changes because the capital requirements of “complex” credit unions have to be similar to the same requirements imposed on banks. Yours truly has always argued that RBC requirements should only be imposed on the largest of institutions. Hopefully we will see further changes in NCUA’s regulations before they take effect.

Entry filed under: Regulatory. Tags: .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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