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McWatters' Focus for Revised RBC Plan
Friday, November 21, 2014 6:45 AM

National Credit Union Administration board member J. Mark McWatters highlighted a list of issues he intends to scrutinize when the agency issues a revised proposed rule on a risk-based capital (RBC) for credit unions. In this month's NCUA Report, McWatters said review and analysis of the proposal was one of his top priorities upon being sworn into his post at the agency this summer.

While the revised proposal is being put together, McWatters said he continues to assess:

  • Whether the NCUA has the legal authority to apply a separate RBC regime to well-capitalized credit unions;
  • How to remove interest-rate risk from the individual risk weights;
  • How to simplify the incorporation of concentration risk in the individual risk weights;
  • How to modify the individual risk weights;
  • How to define a "complex" institution;
  • How to make the individual minimum capital requirement operate in a less problematic manner; and
  • Whether certificates of indebtedness can be used as a form of credit union capital.

McWatters cited the more than 2,000 comments the agency received, including those from more than 350 members of the U.S. Congress, as an indicator that the proposal "merits substantial revision."

"Many challenges remain for credit unions and NCUA in working through these issues," he wrote. "As we move forward to meet those challenges, we must do so in a thoughtful manner."

Credit Union National Association Deputy General Counsel Mary Dunn commended McWatters for his willingness to look beyond NCUA staff analysis.