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Cornerstone Credit Unions Effect Several Positive Changes to RBC Proposal
Tuesday, January 20, 2015 6:40 AM

On Jan. 15, 2015, NCUA voted in favor of publishing for comment a revised version of its risk-based capital (RBC) rule. Although the revised version is not perfect, it includes significant improvements from the original proposal. The proposal can be found here.

Over 2,000 comment letters were submitted to NCUA, and a few hundred of those were from Cornerstone League member credit unions.

"NCUA simply could not ignore the industry," said Cornerstone SVP Regulatory Compliance Counsel Suzanne Yashewski. "This is a prime example of how credit union participation in regulatory advocacy can have a huge impact on regulatory burdens."

In the coming days, Cornerstone will provide credit unions with a detailed summary and talking points to assist with drafting comments in response to the second proposal. The comment deadline will be 90 days from when the proposal is published in the Federal Register, which should be mid to late April.

Cornerstone Requests

Changes in Revised RBC Proposal

Objected to risk-based capital ratio for well capitalized credit unions.

The 10.5% requirement to be well capitalized was lowered to 10%.

Urged reevaluation of risk weights.

Many risk weights were lowered, including: investments, real estate loans, MBLs, corporate credit unions, and CUSOs.

Urged removing interest rate risk for better parity with banks under basel III.

Interest rate risk was removed from the proposal. However, it may be reconsidered in a separate future proposal.

Urged removal of the individual minimum capital requirement.

The individual minimum capital requirement was removed.

Raised concerns with the definition of complex credit union.

Asset size threshold for RBC coverage was raised from $50 million to $100 million.

Urged significantly longer compliance date.

Extended the compliance date from 18 months to over 4 years.