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Federal Register / Vol. 86, No. 44 / Tuesday, March 9, 2021 / Proposed Rules
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the 2015 Final Rule was to reduce the likelihood that a relatively small number of high-risk credit unions would exhaust their capital and cause large losses to the National Credit Union Share Insurance Fund NCUSIF. Under the FCUA, FICUs are collectively responsible for replenishing losses to the NCUSIF.9
The 2015 Final Rule restructured the NCUAs current capital adequacy regulations and made various revisions, including amending the agencys riskbased net worth requirement, by replacing a credit unions risk-based net worth ratio with a risk-based capital ratio.10 The risk-based capital requirements in the 2015 Final Rule are more consistent with the NCUAs riskbased capital ratio measure for corporate credit unions, and are more comparable to the risk-based capital measures implemented by the Federal Deposit Insurance Corporation FDIC, Board of Governors of the Federal Reserve System Federal Reserve Board, and Office of the Comptroller of Currency OCC collectively, the other banking agencies.11
The risk-based capital provisions of the 2015 Final Rule apply only to credit unions that are complex, which the rule defined as those with total assets over $100 million.12 On November 6, 2018,13 the Board published a supplemental final rule that raised the threshold level for a complex credit union to $500 million 2018
Supplemental Rule. Therefore, only credit unions with over $500 million in assets are now subject to the risk-based 9 See 12 U.S.C. 1782c2A. The FCUA requires that each FICU pay an insurance premium equal to a percentage of the FICUs insured shares to establish sufficient reserves in the NCUSIF to pay potential share insurance claims, and to provide assistance in connection with the liquidation or threatened liquidation of FICUs in troubled condition.
10 For purposes of this ANPR, the term riskbased net worth requirement is used in reference to the statutory requirement for the Board to design a capital standard that accounts for variations in the risk profile of complex credit unions. The term risk-based capital ratio is used to refer to the specific standards established in the 2015 Final Rule to function as criteria for the statutory riskbased net worth requirement. The term risk-based capital ratio is also used by the other banking agencies and the international banking community when referring to the types of risk-based requirements that are addressed in the 2015 Final Rule. This change in terminology throughout the ANPR is intended only to reduce confusion for the reader.
11 The Federal Reserve Board and OCC issued a joint final rule on October 11, 2013 78 FR 62018, and the FDIC issued a substantially identical interim final rule on September 10, 2013 78 FR
55340. On April 14, 2014 79 FR 20754, the FDIC
adopted the interim final rule as a final rule with no substantive changes.
12 See, supra note 8.
13 83 FR 55467 Nov. 6, 2018.

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capital requirements of the 2015 Final Rule. The 2018 Supplemental Rule also delayed the effective date of the 2015
Final Rule for one year from January 1, 2019, to January 1, 2020.
The effective date was delayed a second time through a final rule published on December 17, 2019 2019
Supplemental Rule.14 The amendments are now scheduled to become effective on January 1, 2022. The delay has provided credit unions and the NCUA
with additional time to implement the 2015 Final Rule. Further, as explained in the 2019 Supplemental Rule, the delay provided the Board additional time to evaluate the NCUAs capital standards for credit unions.15 The 2019
Supplemental Rule provided several examples of issues the Board would consider during the delay, including asset securitization, the implementation of the Financial Accounting Standards Boards final current expected credit loss CECL methodology, and amendments to the 2015 Final Rule for subordinated debt. Additionally, the delay provided additional time for the NCUA to prepare for internal modernization projects to support the 2015 Final Rule.16 The proposed rule also stated the Board would use the delay to consider whether a community bank leverage ratio CBLR analog should be integrated into the NCUAs capital standards.17
II. This ANPR
The ANPR is an invitation from the Board to participate in shaping potential changes to the 2015 Final Rule. The Board has interacted with stakeholders on the subject of capital requirements going back to 1998, when Congress established the PCA requirements for FICUs. There have been several NCUA
rulemakings regarding capital requirements since 1998. Stakeholders have made it clear to the Board that any capital requirements should be: Tailored to the unique risks of credit unions;
simple in structure; and, designed to avoid unnecessary regulatory burden.
This consistent feedback, tempered by the Boards ongoing commitment to adapt and improve capital standards based upon stakeholder input and lessons learned, remains a driving impetus behind this ANPR.
As noted above, this ANPR invites comments on the RBLR and CCULR
approaches to the risk-based capital requirements. The RBLR approach would replace the 2015 Final Rule in its 14 84
15 Id.

FR 68781 Dec. 17, 2019.
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16 Id.
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entirety. The RBLR approach uses relevant risk attribute thresholds to determine which complex FICUs would be required to hold an additional capital buffer above what is currently specified in the PCA regulations. The CCULR
approach would retain the 2015 Final Rule, but would enable eligible complex FICUs to opt-into a framework to meet all regulatory capital requirements.
Accordingly, the two approaches outlined are mutually exclusive, and the CCULR would not be available under the RBLR.
This ANPR also poses questions designed to garner critical insight into how stakeholders view the implicit tradeoff between a reduction in the complexity and burden of the capital requirements in exchange for holding potentially higher amounts of mandatory capital above the seven percent net worth ratio necessary to be classified as well capitalized. The Board would benefit from hearing the views of FICUs on these possible enhancements now, to allow time to disseminate one of these approaches before the 2015
Final Rule is scheduled to take effect.
The Board also invites any other recommendations that might similarly provide regulatory relief without diminishing the efficacy of its capital regulation and standards.
III. Legal Authority The Board is issuing this ANPR
pursuant to its authority under the FCUA. Under the FCUA, the NCUA is the chartering and supervisory authority for Federal credit unions and the federal supervisory authority for state-chartered FICUs.18 The FCUA grants the NCUA a broad mandate to issue regulations governing both Federal credit unions and all FICUs. For example, section 120
of the FCUA is a general grant of regulatory authority and authorizes the Board to prescribe rules and regulations for the administration of the FCUA.19
Other provisions of the FCUA, such as section 216, confer specific rulemaking authority to address prescribed issues or circumstances.20 Accordingly, the FCUA grants the Board broad rulemaking authority to protect the safety and soundness of the credit union industry and the NCUSIF. This ANPR is being issued under both the general 18 12

U.S.C. 17521775.
U.S.C. 1766a.
20 Other provisions of the FCUA providing the Board with specific rulemaking authority include section 207 12 U.S.C. 1787, which is a specific grant of authority over share insurance coverage, conservatorships, and liquidations. Section 209 12
U.S.C. 1789 grants the Board plenary regulatory authority to issue rules and regulations necessary or appropriate to carry out its role as share insurer for all FICUs.
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