The National Credit Union Administration ("NCUA") set a January 1, 2022 effective date for a final rule that would establish a simplified method of measuring capital adequacy for credit unions classified as complex (those with over $500 million in total assets). The final rule was published in the Federal Register.

As previously covered, the rule updates the NCUA's October 2015 risk-based capital final rule, "including addressing asset securitizations issued by credit unions, clarifying the treatment of off-balance sheet exposures, deducting certain mortgage servicing assets from a complex credit union's risk-based capital numerator, updating several derivative-related definitions, and clarifying the definition of a consumer loan."

The NCUA also finalized an amendment to the Subordinated Debt rule that expands the scope of the rule to include assets issued to the U.S. government and any of its subdivisions.

On choosing the effective date, the Board "acknowledge[d] that January 1, 2022, is less than the standard effective date of 30 days following the publication of this final rule." It cited several factors on why credit unions will not be disadvantaged by the January 1, 2022 date, including, among others,: (i) that credit unions are not required to comply with the Complex Credit Union Leverage Ratio ("CCULR") framework "as it is an optional framework to the 2015 Final Rule"; (ii) credit unions do not have to select their framework until the end of the first quarter in 2022, and (iii) the final rule "does not include any new calculations for complex credit unions and relies on the net worth ratio, an existing capital measure that credit unions report each quarter."

Primary Sources

  1. NCUA: Capital Adequacy - The Complex Credit Union Leverage Ratio; Risk-Based Capital
  2. NCUA: Subordinated Debt

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