NCUA Board to seek comment on RBC delay until 2022

On a 2 to 1 vote, the NCUA board agreed Thursday to seek public comment on a plan to further delay its controversial Risk-Based Capital Rule for another two years—until Jan. 1, 2022. The board last year delayed the effective date of the rule from Jan. 1, 2019 to Jan. 1, 2020.

“This delay will allow the agency to take a surgical approach to implementing this rule in a coordinated manner rather than incrementally,” said NCUA Chairman Rodney Hood.

Board member Todd Harper dissented, saying the RBC rule should be adopted now. Harper worked for former NCUA Chair Debbie Matz when the original RBC rule was adopted in 2015. It is that rule that would be delayed under the plan the board approved.

“All financial institutions should … hold capital commensurate with the risk on their balance sheet,” Harper said, as he intensely questioned NCUA staff on the proposal.

Harper said risk-based capital would help avoid a crisis, adding that the current rules did not help minimize credit union losses during the Great Recession.

Board member J. Mark McWatters noted that when the RBC rule was adopted in 2015, he voted against the proposal because he believed the NCUA board did not have such powers under federal law. He urged the agency's staff to review the issue of whether the board actually has the power to issue the rule.   

The new RBC plan will be open for public comment for 30 days after publication in the Federal Register.

Read more at Credit Union Times.