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Federal Register / Vol. 86, No. 244 / Thursday, December 23, 2021 / Rules and Regulations Pereira, at 703 5482778; or by mail at National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314.
SUPPLEMENTARY INFORMATION:
Table of Contents I. Background A. The NCUAs Risk-Based Capital Requirements B. The Other Banking Agencies Risk-Based Capital and CBLR Framework C. The NCUAs Advance Notice of Proposed Rulemaking II. Legal Authority III. Proposed Rule IV. Final Rule A. Overview of the CCULR Framework B. Qualifying Complex Credit Unions C. The CCULR Ratio D. Calibration of the CCULR
E. Opting into the CCULR Framework F. Voluntarily Opting Out of the CCULR
Framework G. Compliance With the Criteria To Be a Qualifying Complex Credit Union H. Treatment of a Qualifying Complex Credit Union That Falls Below the CCULR Requirement I. Transition Provision J. Reservation of Authority K. Effect of the CCULR on Other Regulations L. Amendments to the 2015 Final Rule M. Technical Amendments N. Other Comments Beyond the Scope of the Proposed Rule V. Regulatory Procedures A. Regulatory Flexibility Act B. Paperwork Reduction Act C. Executive Order 13132 on Federalism D. Assessment of Federal Regulations and Policies on Families E. Small Business Regulatory Enforcement Fairness Act F. Administrative Procedure Act
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I. Background A. The NCUAS Risk-Based Capital Requirements The NCUA ensures the safety and soundness of federally insured credit unions FICUs by examining and supervising federally chartered credit unions FCUs; participating in the examination and supervision of federally insured, state-chartered credit unions in coordination with state regulators; and insuring members accounts at all FICUs up to the statutorily prescribed limits.
Capital adequacy standards are an important prudential tool to ensure 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 and dramatic deleveraging during times of stress.
During a financial crisis, a buffer can mean the difference between the survival or failure of a financial
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institution. Capital levels commensurate with risk insulate credit unions from the effects of unexpected adverse developments in their financial condition, reduce the probability of a systemic crisis, allow credit unions to continue to serve as credit providers during times of stress without government intervention, and provide benefits that outweigh the associated costs.
Following the 20072009 recession, the NCUA substantially reevaluated its capital adequacy standards, which are codified in 12 CFR part 702. On October 29, 2015, as amended on October 18, 2018, the NCUA Board Board published a final rule restructuring its capital adequacy regulations 2015 Final Rule.1 The effective date of the 2015
Final Rule was originally January 1, 2019. The overarching intent of the 2015
Final Rule was to reduce the likelihood that a relatively small number of highrisk credit unions would exhaust their capital and cause large losses to the National Credit Union Share Insurance Fund NCUSIF. Under the Federal Credit Union Act FCUA, FICUs are collectively responsible for capitalizing and replenishing losses to the NCUSIF.2
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. The risk-based capital requirements in the 2015 Final Rule are more consistent with the NCUAs riskbased capital ratio measure for corporate credit unions, consistent with the FCUA, and more comparable to the riskbased 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 in 2013.3
1 80 FR 66626 Oct. 29, 2015. See also, 83 FR
55467 Oct. 18, 2018.
2 See 12 U.S.C. 1782c. The FCUA requires each insured credit union to pay an insurance premium equal to a percentage of the credit unions insured shares when the Board, subject to statutory parameters, assesses a premium. The FCUA also requires each insured credit union to pay and maintain a deposit with the NCUSIF equaling one percent of the credit unions insured shares. The NCUSIFs funds are available to pay share insurance claims, to aid in connection with the liquidation or threatened liquidation of credit unions, and for administrative and other expenses the Board incurs in carrying out the purposes of the share insurance subchapter of the FCUA. See 12
U.S.C. 1783a.
3 The Federal Reserve Board and OCC issued a joint final rule on October 11, 2013 78 FR 62018,
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On November 6, 2018, the Board published a supplemental final rule that raised the threshold level for a complex credit union to $500 million 2018
Supplemental Rule.4 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.5 The 2015 Final Rule is 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 enabled the Board to holistically and comprehensively evaluate the NCUAs capital standards for credit unions.6 Among the items highlighted by the Board for possible consideration during the delay were adoption of a community bank leverage ratio CBLR analogue, the treatment of asset securitizations issued by credit unions, finalization of the Subordinated Debt rule and implementation of the current expected credit loss CECL
standard.7
B. The Other Banking Agencies RiskBased Capital and CBLR Framework As discussed in the proposed rule, the other banking agencies adopted in 2013
a revised risk-based capital rule, which was designed to strengthen their capital requirements and improve risk sensitivity.
In 2018, section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act directed the other banking agencies to propose a simplified, alternative measure of capital adequacy for certain federally insured banks.8 On November 13, 2019, the other banking agencies issued a final rule implementing this statutory directive CBLR Final Rule.9
Under the CBLR Final Rule, the CBLR
framework is an option for depository institutions and depository institution holding companies that meet the following criteria:
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.
4 83 FR 55467 Nov. 6, 2018.
5 84 FR 68781 Dec. 17, 2019.
6 Id. at 68782.
7 Id.
8 Public Law 115174 May 24, 2018. Section 201
is codified at 12 U.S.C. 5371 note.
9 84 FR 61776 Nov. 13, 2019.

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