Links in “Risk-Based Capital”

Oklahoma Senator James Inhofe recently wrote the NCUA expressing his concerns about the proposed risk-based capital rule, including the estimation that Oklahoma credit unions would have to raise about $105M to just meet the capital requirements. What would your institution have to do to keep up with RBC? [8/12/14]

Alan Theriault, founder and CEO of CU Financial Services, thinks so. Theriaut’s firm, which is the leading consulting firm for credit union to bank charters, says that the pending changes to risk-based capital requirements, should cause many credit union boards to give serious consideration to a charter conversion. [7/30/14]

A final rule was released that revises the previous approach to RBC that applies to all banks, savings associations, bank holding companies, etc. The rule, effective October 1, 2014, eliminates the requirement that eligible guarantees be made by eligible guarantors in order to calculate the risk-weighted assets of an exposure. [7/30/14]

400 participants attended the three NCUA Listening Sessions held in Los Angeles, Chicago, and Alexandria. Recordings of the sessions are to be available on the NCUA website in the near future. In a statement issued yesterday, NCUA Chair Debbie Matz hinted that interest rate risk may be better evaluated through the supervisory process than through risk weightings under the proposed risk-based capital rule. [7/22/14]

In a letter to the House Financial Oversight Committee, NCUA Chair, Debbie Matz, claims that if the proposed risk-based capital rule had been in effect in 2007, it would have saved the NCUA Share Insurance Fund (NCUSIF) as much as $180 million. Matz added that the reason that some of the risk weightings are different in the proposed rule versus the FDIC rule is that the FDIC rule does not take into consideration concentration risk. [7/21/14]

This is what the credit union executives and trade association representatives thought who attended yesterday’s last Listening Session. Approximately 150 attendees at the Alexandria, VA, meeting continued to express concerns about the proposed risk based capital rule, but didn’t leave with any clear idea of the direction NCUA is planning to take. [7/18/14]

The Federal Reserve Board, FDIC, and OCC agreed upon a correction for the definition of "eligible guarantee" as part of their risk-based capital rules. Better take a look, as the change could affect the way your institution determines its regulatory capital ratios. [7/17/14]

According to NCUA Chair Debbie Matz, speaking at yesterday’s listening session in Chicago, the agency will be extending the implementation period for the risk-based capital rule beyond the proposed 18-month time frame. Matz also called CUNA’s estimated $7 billion dollar cost of the rule to be a “myth.”  [7/11/14]

Changing gears, NCUA announces that it will provide audio recordings of its listening sessions. Although any topic may be discussed, the sessions to date have been dominated by questions and comments on the proposed risk-based capital rule. The transcripts will be available on the NCUA website within a few weeks of each upcoming session. [7/9/14]

NCUA will have a full-capacity crowd on hand at its listening session on the proposed risk-based capital rule scheduled for this Thursday in Chicago. Due to demand the attendance limit was expanded from 150 seats to 169 seats. The session, led by NCUA Board members Debbie Matz and Rick Metsger, will not be broadcast nor will audio from the session be available. [7/8/14]