The industry has already seen what kind of change is possible when credit union voices are united. Inundated with comments from credit unions, NAFCU and members of Congress on both proposals, the NCUA has finalized a rule that contains many changes sought by NAFCU and its members since it was first proposed in January 2014. Some of those victories in this final rule include:

Removal of individual minimum capital requirements: The NCUA says it will rely on other supervisory authorities to address deficiencies in capital levels.
Removal of interest rate risk from the RBC calculation: The NCUA has removed interest rate risk from its risk-based capital ratio. Further, the risk weight for investments in CUSOs is now 150%, down from the proposed 250%.
Increase in the threshold for determining if a credit union is "complex": For the purposes of capital requirements, the threshold was raised from $50 million to $100 million in assets. However, NAFCU still has concerns with the NCUA's continued plan to define a "complex" credit union for RBC purposes solely based on asset size.
Elimination of the 1.25% allowance for loan and lease losses cap: NAFCU said limiting ALLL to 1.25% of risk assets was too conservative considering upcoming rulemaking expected from the Financial Accounting Standards Board.
Revisions to a number of risk weights: Risk weights, including those for member business loans, CUSOs, corporate credit unions, real estate loans and investments, all underwent changes from the first proposal to the final rule. Basically, the final rule now recognizes that some business loans are riskier than others.
A longer implementation period: The implementation date of Jan. 1, 2019, is more than twice the amount of implementation time provided in last year's proposal.

Instant Insights /

With RBC2 Final, NAFCU Focuses on Legislative Solution

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