NCUA Proposes Delay in Risk-based Capital Rule

The delay would allow NCUA to evaluate capital standards for federally insured credit unions; provide additional time to prepare for rule’s implementation.

6/25/2019 

Metal gears with words: Rules, Regulations, Compliance, Standard, Policies.

The National Credit Union Administration (NCUA) voted 2-1 on June 20 to suspend the effective date of the risk-based capital rule until Jan. 2, 2022. This marks the second delay since the rule was approved originally in October of 2015. Last year, NCUA delayed implementation from Jan. 1, 2019 until Jan. 1, 2020. 

“This is an appropriate time to consider additional improvements to the risk-based capital rule,” NCUA Board Chairman Rodney E. Hood said. “We have a strong economy, and credit unions are very well-capitalized, with a net worth above 11 percent. As a regulator and steward of the National Credit Union Share Insurance Fund, I am committed to a system of prudent capital standards as required by the Federal Credit Union Act.” 

Your Association supports the decision. 

“This gives the NCUA time to consider solutions providing credit unions with more access to capital, including subordinated debt, capital requirements for asset securitization, and alignment with the community bank leverage ratio.” 

The proposed delay would allow the NCUA Board additional time to holistically and comprehensively evaluate capital standards for federally insured credit unions and also provide covered credit unions and the NCUA with additional time to prepare for the rule’s implementation. During the extended delay period, the NCUA’s current Prompt Corrective Action (PCA) requirements will remain in effect. 

Comments regarding the proposed delay must be received within 30 days after publication in the Federal Register. 

Question of the Week 

Q. How do I protect my credit union from liability if I take a power of attorney?

A. To protect a credit union from liability, the person holding the power of attorney should fill out an affidavit  stating several facts:   

  • First, that the person presenting himself or herself as the attorney-in-fact and signing the affidavit or declaration is the person named in the power of attorney.   
  • If the attorney-in-fact is named in the power of attorney as a successor attorney-in-fact, the affidavit should include the circumstances or conditions stated in the power of attorney that have occurred that would cause that person to become the acting attorney-in-fact.   
  • Further, that to the best of the attorney-in-fact’s knowledge, the principal is still alive and at the time the power of attorney was signed, the principal was competent to execute the document and was not under undue influence to sign the document.  
  • In addition, that all events necessary to making the power of attorney effective have occurred.   
  • The affidavit must also state that the attorney-in-fact does not have actual knowledge of the revocation, termination, limitation, or modification of the power of attorney or of the attorney-in-fact’s authority.   
  • That the attorney-in-fact does not have actual knowledge of the existence of other circumstances that would limit, modify, revoke, or terminate the power of attorney or the attorney-in-fact’s authority to take the proposed action.   
  • If the attorney-in-fact was married to the principal at the time of execution of the power of attorney, then at the time of signing the affidavit or declaration, the marriage of the principal and the attorney-in-fact has not been dissolved or declared invalid.   
  • Lastly, that the attorney-in-fact is acting in good faith pursuant to the authority given under the power of attorney. 

Idaho and Washington each have state law provisions regarding these affidavits or certification of power of attorney.” 

Resources 

RCW 11.125.190 
RCW 11.125.430 
ORS 127.035 
IDS 15-12119 
IDS 15-12-302 

Legal Briefs 

National Credit Union Administration (NCUA) 
NCUA proposed delaying the effective date of the risk-based capital rule until Jan. 1, 2022. 
NCUA issued guidance reminding credit unions that the CFPB issued a final rule delaying the effective date of the underwriting provisions of the Payday, Vehicle Title, and Certain High-Cost Installment Loans Rule until Nov. 19, 2020. 

Consumer Financial Protection Bureau (CFPB)
CFPB released final rule amendments for Reg CC dollar thresholds. 

Federal Financial Institutions Examination Council (FFIEC) 
FFIEC released list of distressed or underserved nonmetropolitan middle-income geographies. 

Washington State Department of Financial Institutions Division of Credit Unions (DCU) 
DCU issued DCU Bulletin B-19-04, which serves as a notification of proposed rulemaking to make the notice process and requirements clear for credit unions that want to use a power allowed in other states, which is permitted under HB 1247. 

Office of Foreign Assets Control (OFAC) 
OFAC has updated the SDN list as of June 21, 2019. The last update prior to this was June 19, 2019. 

Questions? Contact the Compliance Hotline: 1.800.546.4465; [email protected].