NCUA publishes proposal and ANPR

The National Credit Union Administration has published two rulemaking documents for comment in this morning's Federal Register.

• A proposal published at 86 FR 13494 to add the "S" (Sensitivity to Market Risk) component to the existing CAMEL rating system and redefine the “L” (Liquidity Risk) component, thus updating the rating system from CAMEL to CAMELS. The proposal to add the “S” component will enhance transparency and allow the NCUA, State Supervisory Authorities, and federally insured credit unions to better distinguish between liquidity risk (“L”) and sensitivity to market risk (“S”). The amendment would also enhance consistency between the regulation of credit unions and other financial institutions. The Board is proposing to implement the addition of the “S” rating component and a redefined “L” rating as early as the first quarter of 2022. Comments are due by May 10, 2021.
• An advance notice of proposed rulemaking published at 86 FR 13498 to solicit comments on two approaches to simplify its risk-based capital requirements. The first approach would replace the risk-based 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 risk-based capital rule (currently scheduled to become effective on January 1, 2022) 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. Comments will be accepted through May 10, 2021.