At its Thursday meeting via live audio webcast, the NCUA board of directors voted 3-0 in favor of a 60-day comment period on the proposed rulemaking of Parts 702 and 703 of the Complex Credit Union Leverage Ratio. Although the vote was unanimous, Boardmember Rodney Hood said he voted in favor of the proposal “begrudgingly,” and would prefer the matter be tabled or even repealed and the focus turned to other areas of capital, CUTODAY reported.
The proposed rule amends the NCUA’s capital adequacy regulation to provide a simplified measure of capital adequacy for federally insured credit unions that are classified as “complex” (those with total assets greater than $500 million) and is comparable to the Community Bank Leverage Ratio that went into effect in January 2020, according to the agency.
The new CCULR also gives complex credit unions that maintain a minimum net-worth level and meet other qualifying criteria a streamlined framework to manage capital in their institutions, and as long as a credit union in the CCULR framework maintains the minimum net worth ratio, it would be considered well capitalized, according to the NCUA.
Under this proposal, the minimum net worth level under the CCULR framework would initially be 9% on Jan. 1, 2022, and this level would gradually increase to 10% by January 1, 2024. Using Dec. 31, 2020 financial performance data, the NCUA estimates that most complex credit unions would be able to meet the CCULR’s initial net worth requirement of 9%, the agency stated.
Digital assets and related technologies
The board of directors also approved a request for information on the use of digital assets and related technologies by federally insured credit unions. Comments will be accepted for 60 days after the request for information is published in the Federal Register.
“This request is the logical next step in laying the groundwork for federally insured credit unions to leverage these innovations, but we must recognize that things continue to quickly evolve,” said Todd Harper, NCUA chairman. “We especially need to understand what limitations could affect credit unions’ ability to adopt these technologies and what risks they could pose, so that we can adopt appropriate guardrails to prevent regulatory arbitrage and protect the financial well-being of members and the safety and soundness of credit unions.”
Finally, prior to the meeting, the NCUA on Wednesday revised the board of directors’ agenda, removing discussion of the NCUA’s 2022 – 2026 Strategic Plan. No reason for the change was given.
Additional details about Thursday’s meeting can be accessed on the NCUA website. The next NCUA board meeting is at 10 a.m. on Sept. 23, and can be livestreamed at ncua.gov. There is no meeting scheduled for August.