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Federal Register / Vol. 86, No. 44 / Tuesday, March 9, 2021 / Proposed Rules
Authority: 12 U.S.C. 1761a, 1761b, 1766a, 1766h, 1789a11.
713.6

Amended
12. Amend 713.6 by removing the word, CAMEL, and adding, in its place, the word, CAMELS, wherever it appears.

FR Doc. 202101396 Filed 3821; 8:45 am BILLING CODE 753501P

NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Parts 702 and 703
NCUA20210010
RIN 3133AF35

Simplification of Risk Based Capital Requirements National Credit Union Administration.
ACTION: Advance notice of proposed rulemaking.
AGENCY:

The National Credit Union Administration NCUA Board Board is issuing this advance notice of proposed rulemaking ANPR to solicit comments on two approaches to simplify its risk-based capital requirements. The Boards risk-based capital requirements are set forth in a final rule dated October 29, 2015, which is currently scheduled to become effective on January 1, 2022. The delayed effective date has provided the Board with additional time to evaluate the capital standards for federallyinsured credit unions FICUs that are classified as complex those with total assets greater than $500 million. The first approach would replace the riskbased capital rule with a Risk-based Leverage Ratio RBLR requirement, which uses relevant risk attribute thresholds to determine which complex credit unions would be required to hold additional capital buffers. The second approach would retain the 2015 riskbased capital rule but enable eligible complex FICUs to opt-in to a complex credit union leverage ratio CCULR
framework to meet all regulatory capital requirements. The CCULR approach would be modeled on the Community Bank Leverage Ratio framework, which is available to certain banks.
DATES: Comments must be received on or before May 10, 2021.
ADDRESSES: You may submit comments, by any of the following methods Please send comments by one method only:
Federal eRulemaking Portal: http
www.regulations.gov. The docket number for this advance notice of
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SUMMARY:

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proposed rulemaking is NCUA2021
0010. Follow the instructions for submitting comments.
Fax: 703 5186319. Include Your name Comments on Simplification of Risk Based Capital Requirements in the transmittal.
Mail: Address to Melane Conyers Ausbrooks, Secretary of the Board, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 223143428.
Hand Delivery/Courier: Same as mail address.
Public inspection: All public comments are available on the Federal eRulemaking Portal at http
www.regulations.gov as submitted, except as may not be possible for technical reasons. Public comments will not be edited to remove any identifying or contact information.
Due to social distancing measures in effect, the usual opportunity to inspect paper copies of comments in the NCUAs law library is not currently available. After social distancing measures are relaxed, visitors may make an appointment to review paper copies by calling 703 5186540 or emailing OGCMail@ncua.gov.
FOR FURTHER INFORMATION CONTACT:
Policy: Thomas Fay, Director, Division of Capital Markets, Office of Examination and Insurance, at 703
5181179; Legal: Rachel Ackmann, at 703 5482601 or Ariel Pereira, at 703
5482778; or by mail at National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314.
SUPPLEMENTARY INFORMATION:
I. Background II. This ANPR
III. Legal Authority IV. Risk-Based Leverage Ratio RBLR
V. Complex Credit Union Leverage Ratio CCULR
VI. Timeline VII. Conclusion
I. Background Capital adequacy standards are a prudential tool to protect the safety and soundness of individual credit unions and the credit union system as a whole.
Capital serves as a buffer for credit unions to prevent institutional failure during times of stress. During a financial crisis, a buffer can mean the difference between the financial institution surviving or failing. Higher levels of capital insulate credit unions from the effects of adverse developments in assets and liabilities, allowing credit unions to continue to serve as credit providers during times of stress without government intervention. Higher levels of capital also reduce the probability of a systemic crisis, producing benefits
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that generally outweigh the associated costs.
On August 7, 1998, Congress enacted the Credit Union Membership Access Act CUMAA.1 CUMAA addressed credit union capital adequacy standards by adding section 216 to the Federal Credit Union Act FCUA.2 Section 216
directed the Board to adopt a regulation to establish a system of prompt corrective action PCA to restore the net worth of all FICUs if they are inadequately capitalized. Section 216
requires supervisory actions indexed to five statutory net worth categories, ranging from well capitalized to critically undercapitalized. The mandatory actions and conditions triggering conservatorship and liquidation are expressly prescribed by statute.3 To supplement the mandatory actions, section 216 charged the NCUA
with developing discretionary actions which are comparable to the discretionary safeguards available under section 38 of the Federal Deposit Insurance Actthe statute that applies PCA to other federally insured depository institutions.4
Section 216d1 of the FCUA
requires that the NCUAs PCA system include, in addition to the statutorily defined net worth ratio requirement, a risk-based net worth requirement for credit unions that are complex, as defined by the Board.5 The FCUA
directs the NCUA to base its definition of complex credit unions on the portfolios of assets and liabilities of credit unions. 6 If a credit union is not classified as complex, as defined by the NCUA, it is not subject to a risk-based net worth requirement. The NCUA
implemented the regulatory PCA system mandated by section 216 through a final rule published on February 18, 2000.7
The NCUAs PCA regulations are codified in 12 CFR part 702.
Following the 20072009 recession, the NCUA substantially reevaluated the capital adequacy standards codified in part 702. On October 29, 2015, the Board published a final rule restructuring the PCA regulations 2015
Final Rule.8 The overarching intent of 1 Public
Law 105219, 112 Stat. 913 1998.
FCUA is codified at 12 U.S.C. 1751 et seq.
Section 216 of the act is codified at 12 U.S.C.
1790d.
3 12 U.S.C. 1790de, f, g, i; 12 U.S.C.
1786h1F, 1787a3A.
4 12 U.S.C. 1790db1A. Section 38 of the FDI
Act, 12 U.S.C. 1831o, was added by section 131 of the Federal Deposit Insurance Corporation Improvement Act, Public Law 102242, 105 Stat.
2236 1991.
5 12 U.S.C. 1790dd1.
6 12 U.S.C. 1790dd.
7 65 FR 8560 Feb. 18, 2000.
8 80 FR 66626 Oct. 29, 2015.
2 The
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