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Michigan Credit Union League

NCUA's RBC 2.0 Removes SAS Credit Unions from Rule

After much anticipation the NCUA issued the long-awaited revisions to its Risk Based Capital proposal. The proposal was published in the Federal Register Jan. 27. Comments are due April 27, 2015. While CUNA and MCUL & Affiliates are still reviewing the 450-plus page proposal it appears that the NCUA board got the message from the 2,000-plus comment letters that changes were needed across the board to make this proposal workable for the credit union industry.

Under the original proposal small-asset-size credit unions could have felt a significant impact as they drew closer to the $50 million threshold through growth and mergers. The asset size threshold for RBC initially covered credit unions with assets of $50 million and above, meaning larger SAS credit unions were close to hitting the cap. The new proposal raises the threshold to $100 million, thus reducing the number of credit unions covered from 2,237 to 1,455 nationally with 177 credit unions in Michigan no longer covered.

Several additional areas were changed in the new proposal including:

  • Definition of "well capitalized" reduced from 10.5 percent to 10 percent
  • Risk weights for MBLs, CUSOs, long-term investments and servicing rights reduced
  • Interest rate risk elements were stripped out, to be handled in a separate rule
  • Threshold for rule applying to a credit union raised from $50 million to $100 million
  • Removed the provision dealing with an individual minimum capital requirement
  • Compliance period moved from 18 months to Jan. 1, 2019
  • Certain goodwill on the books would be allowed until 2025

During the first phase of RBC, concern was raised by SAS credit unions, CUNA and MCUL regarding the impact to small credit unions. The same concern holds true today and MCUL will continue to work in collaboration with CUNA to assess any impact to SAS credit unions and advocate for change during the new 90-day comment period.

More information is available on MCUL's Regulatory Outreach page.

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2015-02-05 00:00:00