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June 29, 2018

House agrees to delay RBC rule

The adoption of “risk-based capital” by credit unions would be delayed by two years – to 2021 -- under legislation agreed to by the House Wednesday. The legislation now heads to the Senate for consideration.

The House-passed Foreign Investment Risk Review Modernization Act of 2018 (H.R. 5841, adopted on a vote of 400-2), which contains the credit union rule change, would delay the regulation approved three years ago by the National Credit Union Administration (NCUA) Board. Currently scheduled for implementation Jan. 1 of 2019, the “RBC” rule revises the agency’s “prompt corrective action” regulations, replacing the current risk-based net worth requirement with a new risk-based capital ratio for federally insured credit unions.

NCUA, in issuing the final rule three years ago, said the RBC requirement is more consistent with the agency’s risk-based capital measure for corporate credit unions and more comparable to regulatory risk-based capital measures used by the Federal Deposit Insurance Corp. (FDIC), Board of Governors of the Federal Reserve System (Fed), and Office of the Comptroller of Currency (OCC). The original effective date was intended to coincide with a full phase-in of FDIC risk-based capital measures in 2019.

Additionally, NCUA has been working on changes to its call report (Form 5300); comments were due in April on proposed revisions. In issuing the proposal, NCUA anticipated a delay or even a repeal of the RBC rule, including a separate schedule in the proposal for risk-based capital, “in case the rule is not delayed or repealed,” the agency said.

H.R. 5841, the Foreign Investment Risk Review Modernization Act


If the two-year delay is agreed to by House/Senate conferees (and the president signs the bill into law), there may be time to consider other revisions – including the addition of alternative capital.

In its comment letter on the RBC proposal three years ago, NASCUS urged the agency to take the opportunity to “strengthen the utility of supplemental capital for credit unions, while the system advocates for a wider legislative solution that will redefine the net-worth ratio.” NCUA, however, in its preamble to the final rule, explained that it would have to issue a separate notice of proposed rulemaking with specific criteria and requirements before approving a final rule on supplemental capital. The agency stated that “therefore, there is no need to delay release of this final rule” to work on a supplemental capital component. NASCUS, following the approval of the final rule in the fall of 2015, argued that now is the opportune time to consider the supplemental capital component.

NASCUS comment letter, RBC proposal (April, 2015)


The House also this week approved a provision for a safe harbor to keep suspicious accounts open in financial institutions at the behest of law enforcement. The Cooperate with Law Enforcement Agencies and Watch Act of 2018 (H.R. 5783) (passed on a vote of 379-4, H.R. 5783) would allow a financial institution to comply with a written request by law enforcement – meaning a federal, state, tribal or local law enforcement body – to maintain a suspicious account without being penalized by any federal or state department or agency. The measure does not prevent federal authorities from validating a cited request to hold an account open, and it also does not relieve a financial institution from complying with federal reporting requirements, including suspicious activity report (SAR) requirements. A similar bill, S. 3045, awaits action by the Senate Banking Committee.

Cooperate with Law Enforcement Agencies and Watch Act of 2018 (H.R. 5783)


Oklahoma became the 30th state to approve legalized marijuana for medical use following results of a state-wide vote Tuesday. It was the first such question on a state ballot in 2018; votes in Michigan and Utah on marijuana questions are set for later this year. Under the proposed law, a two-year medical marijuana license would allow someone to possess up to 8 ounces of marijuana, six mature plants and six seedlings, along with edibles and concentrated forms of the drug. The ballot measure, approved by voters 57% to 43%, allows doctors to recommend cannabis for any medical condition they see fit.

Outside of Oklahoma, recreational marijuana is already legal in nine states and medical marijuana is legal in 29. In states that have legalized some form of marijuana use (which, including Oklahoma, means more than three in four of all states), legitimate cannabis-related businesses are blocked from accessing the basic banking services. But efforts are underway in Congress to address that.

Earlier this month, President Donald Trump said he would “probably support” the bipartisan Strengthening the Tenth Amendment Through Entrusting States Act (STATES Act, S.3032). The bill was introduced by Sens Cory Gardner (R-Colo.) and Elizabeth Warren (D-Mass.). A House version has been brought forward by Reps. David Joyce (R-Ohio) and Earl Blumenauer (D-Ore.), H.R. 6043, also known as the STATES Act.

If the STATES Act is enacted, businesses would be permitted to obtain services at credit unions and other financial institutions. However, neither bill has proceeded beyond the committee consideration stage. Additionally, the Department of Justice has rescinded the Obama-era policy that permitted legalized cannabis to expand in states across the country. Reportedly, however, DOJ’s own prosecutors have yet to bring federal charges against pot businesses that are abiding by state law. 

Strengthening the Tenth Amendment Through Entrusting States Act (STATES Act)


Got an itch to learn more about federal share insurance? Scratch it this summer with two webinars scheduled by NCUA, in July and August, about the workings of the National Credit Union Share Insurance Fund (NCUSIF), the agency said this week. The first webinar, “Looking for a CURE for Share Insurance? – Part One,” is scheduled for July 18 at 2 p.m. ET; it will provide a basic understanding of share insurance. The second, “We’re Giving YOU the Share Insurance CURE – Part Two,” will go more in-depth and is scheduled for Aug. 15, also at 2 p.m. ET. NCUA said sessions will have panels of staff from the NCUA’s Office of Credit Union Resources and Expansion;  registrants can submit questions in advance (via email to; subject line for the first webinar should read, “Share Insurance – Part One;” subject line for the second webinar should read, “Share Insurance – Part Two.”) Technical questions about accessing either webinar should be emailed to

NCUA to Host Share Insurance Webinars

ON THE ROAD: Talking current, key issues in CA

Understanding the new Current Expected Credit Loss (CECL) accounting standard, compliance considerations for commercial loans, cybersecurity, ALM and more were among the issues presented and discussed this week at the NASCUS California Examiner School held this week in the Riverside, Calif., area. In developing the program, NASCUS worked closely with the California Department of Business Oversight to provide their staff with professional development training – resulting in a capacity crowd gathered to hear the latest from a crew of experienced speakers.

Key sessions look at top issues: cybersecurity, payments -- and more

The 2018 NASCUS State System is just around the corner (July 16-19 in Orlando), featuring a strong agenda and speakers focusing on key issues. Among them:

  • Resiliency in the Wake of a Destructive Cyber-Attack: featuring Trey Maust, CEO, Sheltered Harbor (a not-for-profit subsidiary of FS-ISAC), looks at how credit unions—through participation in a Sheltered Harbor initiative—can help protect their members, other financial institutions, and public confidence in the financial system if a catastrophic event like a cyber-attack causes an institution’s critical systems, including backups, to fail.
  • Thoughts of Housing Finance Reform: with Isaac Boltansky, Director of Policy Research, Compass Point Research, explores the issues related to housing finance reform and surveys the possible outcomes, including the fate and future of the government-sponsored enterprises (GSEs) that underpin the mortgage market.
  • Preparing Banks for Faster Payments: with Chris Selmi, President, WesPay Advisors, examines real time payments models and the potential opportunities to credit unions, including advantages, limitations, and risks offered by new payment networks.
  • Back to the Future: with John Lass, President, Lass Advisory Services LLC, reports on how recent advances in technology have made it essential for credit unions to implement and embrace truly customer-intimate approaches to serving their members.

The 2018 State System Summit -- held at the Disney Yacht and Beach Club resort in Orlando – is a four-day program of mutual exchange and dialog among credit union regulators and practitioners, focusing on the issues for the state system.

Registration, agenda 2018 NASCUS State System Summit

BRIEFLY: Sessions added for MI, TN; have a great holiday!

Fill out your education calendar this fall with two additional offerings from NASCUS: The Michigan Examiners’ Conference in October, and the Tennessee Directors’ College in December. The Michigan session (Oct. 15-19 in Ann Arbor) for examiners is one of the series of conferences that NASCUS offers state examiners a complete look at the ever-changing regulatory environment, with a thorough run-down of the impact on federally insured, state-chartered credit unions from new or proposed federal regulations. The Tennessee Session (Dec. 4 in Nashville) – presented in partnership with the Tennessee CU League -- is part of the collection of colleges NASCUS offers across the states to hear first-hand from state regulators and learn of their expectations of credit union directors, and the issues that directors will confront, including BSA requirements, cyber security, succession planning, interest rate risk, national issues and much more … finally: here’s to a happy and safe July 4 holiday to all!

Oct. 15-19; MI Examiners School (Ann Arbor, MI)

Dec. 4: TN Directors' College (Nashville, TN), in partnership with the Tennessee Credit Union League (TCUL)

Information Contact:
Patrick Keefe,