Mellin writes comment letter in support of NCUA’s proposed RBC delay

Mellin250.jpgIn a recent letter to NCUA, New York Credit Union Association President/CEO William J. Mellin said the Association is supportive of proposed regulations delaying the effective date of the risk-based capital rules. The proposal seeks to delay the effective date of the rules until Jan. 1, 2022.

At its October 2015 meeting, the NCUA board originally approved the RBC rule, which was scheduled to go into effect on Jan. 1, 2019. The agency indicated the final rule “will provide regulatory relief to non-complex credit unions [and] protect the vast majority of well-run and well-capitalized credit unions and reduce the chances of them paying losses when a small number of credit unions gamble with other people’s money.”

“NCUA subsequently passed a supplemental final rule amending the 2015 Final Rule by delaying the effective date until January 1, 2020, and raising the asset threshold for a complex credit union from $100 million to $500 million (2018 Supplemental Rule),” Mellin wrote. “Raising the asset threshold will exempt over 1,000 federally insured credit unions from the rule.”

The current proposal would delay both the 2015 Final Rule and the 2018 Supplemental Rule until Jan. 1, 2022 and is being proposed to give the NCUA additional time to consider improvements to the proposal.

Mellin concluded that the Association and its members support the proposed delay and encourages the NCUA to reexamine the rules to consider whether they should be applied to credit unions at all. His final suggestions were that one of the primary reasons former Chairman Matz put forward for advancing sophisticated RBC requirements was that she believed NCUA was required to impose a capital framework on complex credit unions that was comparable to the framework imposed on banks.

“Now that bank regulators are considering revisions to community bank capital requirements, NCUA should consider taking similar steps for credit unions,” Mellin wrote.

As previously reported, the NCUA board of directors approved a proposed rule on the agency’s RBC requirements at the board meeting in June. The proposed rule approved calls for a delay in the effective date for its RBC rules, pushing the date back to Jan. 1, 2022 rules that were to go into effect on Jan. 1, 2020. It is just the latest delay in a rule that was originally proposed in 2014 and finalized in 2015.

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