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Oct. 19, 2018

RBC extension, higher threshold OK’d;
has door opened to alternative capital?

A one-year extension on the implementation of “risk-based capital” (RBC) rules for federally insured credit unions with $500 million or more in assets was approved by the NCUA Board Thursday – action which may have set the stage for “alternative capital” rules to come. All three actions have been advocated by NASCUS.

The two-member board voted unanimously to approve a “supplemental” final rule delaying rules to Jan. 1, 2020 requiring large, “complex” credit unions to adopt risk-based capital; the effective date had been Jan. 1, 2019. In addition, the final rule raises the asset threshold for a complex credit union from $100 million to $500 million.

The final rule extends the implementation date, and asset threshold, first set in 2015. NCUA said raising the threshold for defining a complex credit union will exempt an additional 1,026 federally insured credit unions from the RBC rule, but leaves 531 complex credit unions subject to the rule when it takes effect. NCUA also said more than 98% of all complex credit unions will be considered well-capitalized.

NASCUS had supported both the one-year extension and increasing the threshold in its comment letter submitted this summer. Additionally, NASCUS recommended that NCUA during the year’s delay work with state regulators to develop a supplemental capital framework for insured credit unions.

And that is apparently what NCUA plans to do. In comments, NCUA Board Member Rick Metsger said that, over the next year, the agency will work on a supplemental (or, alternative) capital rule with an aim of issuing a final rule that matches with RBC rule’s new effective date.

Metsger said Thursday’s action gives the board, “in the not-too-distant future, the opportunity to adopt” a final alternative capital rule with an implementation date to coincide with the new effective date for risk-based capital. McWatters concurred with his comments. The agency already has a leg up on this issue, as it issued an advance notice of proposed rulemaking (ANPR) on alternative capital in February 2017.

(In a 40-second video (click to start), NCUA Board Member Rick Metsger (right) outlines an approach for dealing with alternative capital, as Board Chairman J. Mark McWatters listens in.)

In comments on the ANPR last year, NASCUS President and CEO Lucy Ito supported a rule on alternative capital “because it’s the right thing to do.” In the 19-page comment letter, NASCUS also pointed out that alternative capital is a potentially valuable “tool in the tool box” of credit unions’ and regulators’ risk management, provides a capital buffer, and serves as a counter-cyclical means to maintain service to members.

(Note: Both members of the NCUA Board are nearing the ends of their tenure. The term for Metsger, a Democrat appointee, officially ended in August 2017; he’s been a holdover since then, as allowed under the Federal Credit Union Act. The term for McWatters, a Republican appointee, ends in August 2019. A third seat on the board remains unfilled. In June, President Donald Trump nominated former NCUA Board Member Rodney Hood to a second stint on the agency board. Hood is a Republican nominee.)

In other action, the NCUA Board issued for comment a proposed rule designed to clarify federal credit union bylaw provisions and provide detailed guidance “to help credit union officials, employees, and members better understand provisions, particularly a credit union’s ability to limit services to a disruptive or abusive member.”

Risk-Based Capital—Supplemental Rule

NASCUS Comment letter, proposed supplemental rule on RBC

NASCUS Comment letter, ANPR on supplemental capital

NCUA proposed rule: Federal Credit Union Bylaws


The agency board’s actions earned a number of comments from the state system, as NASCUS’ Ito outlined in a press statement Thursday:

On a forthcoming alternative capital rule: “NASCUS is encouraged that the implementation date of a potential alternative capital rule could coincide with the risk-based capital rule’s new effective date in 2020. We have long held that alternative capital should be a part of the risk-based capital framework because it could help protect the NCUSIF from losses by encouraging credit unions to attract additional loss-absorbing forms of capital that they would otherwise forego. We will continue to engage with NCUA to secure this tool for credit unions.”

On the delaying RBC implementation: “We are pleased that the NCUA Board recognized that developing risk-based capital requirements is a complex endeavor that will affect credit unions and examiners, alike. Delaying the rule for one year will allow NCUA to develop risk-based capital guidance as well as a concomitant alternative capital rule and enable credit unions to prepare for compliance.” 

On raising RBC applicability to $500 million: “NASCUS applauds the NCUA board for raising the threshold from $100 million to $500 million.  By raising the threshold, NCUA is providing much needed regulatory relief to smaller institutions without posing significant risk to the share insurance fund.”


New summaries of NCUA’s two, recent “letters to credit unions” have been posted by NASCUS, outlining the key issues in both. The letters – on Sharing Bank Secrecy Act Resources (LTCU 18-CU-04), and Merger Rule Provisions, including Member-to-Member Communications (LTCU 18-CU-03) – are summarized for members only.

The former letter focuses on the joint statement issued last week by NCUA and the other federal banking agencies (Federal Reserve, FDIC and OCC) clarifying that banks and credit unions may enter into collaborative arrangements to share resources to manage their Bank Secrecy Act (BSA) and anti-money laundering (AML) obligations more efficiently and effectively. “This means that credit unions may share personnel or other resources to meet compliance obligations,” the letter notes.

The latter letter focuses on the rule issued last week (Oct. 1) on voluntary mergers that, among other things, mandated disclosure of merger-related compensation paid to covered officials of the merging credit union and created a process for NCUA to facilitate member-to-member communications for the merging credit union’s members.

Both summaries – and links to the original letters -- are available (again, to members only) via the NASCUS list of 2018 LTCUs.

NCUA-Released Letters to Credit Unions and NASCUS Summaries


Praise for the reduction in the overhead transfer rate (OTR), an appeal for training of state examiners, and a recommendation to fully fund technology changes related to NCUA operational changes were all included in NASCUS’ testimony this week on the agency’s budget.

In presenting the NASCUS testimony, association Vice President of Communications Shelton Roulhac outlined the three areas against a background of a commitment “to continuing a balanced partnership with NCUA that contributes to a vibrant dual charter credit union system well into the future.”

(In a four-minute video (click image to start), NASCUS’ Shelton Roulhac (center) delivers the state system message. He is flanked witnesses from CUNA (at left, Chief Economist Mike Schenk) and the National Assn. of Federally-Insured CUs (Chairman Jeanne Kucey).

NCUA has proposed budgets of $334.8 million in 2019 and $343.9 million in 2020. The proposed 2019 budget figure represents an increase of about $13.9 million from the approved 2018 budget of $320.9 million.

The “operating budget” (which makes up more than 90% of NCUA’s overall spending plan) will be funded by two sources: operating fees from federal credit unions, and the OTR (which represents the rate at which NCUA transfers funds from the National Credit Union Share Insurance Fund (NCUSIF) to the agency to finance “insurance-related expenses”). According to NCUA, 29.4% of the operating budget will come from the states’ portion of the OTR, and 31% from FCUs’ portion. The remaining 39.6% will come from FCU operating fees.

With regard to the OTR, Roulhac noted that recent changes to the rate and how it is figured “are good for all federally insured credit unions.”

He noted that for 2019, the OTR proposed by NCUA will be an estimated 60.4% (the lowest rate since 2014 and the third straight year of a reduction in the rate). The recent, lower rates follow the agency’s adoption of a new method for calculating the rate in November 2017, he pointed out.

“We applaud the NCUA board for employing a ‘principles-based approach’ to calculating the OTR and subjecting the OTR to public notice and comment,” Roulhac said. “We value the collaborative nature of our relationship and look forward to the OTR review in 2020, unless there is a proposed change to the methodology sooner.”

In other comments, the NASCUS presenter:

  • Sought assistance from NCUA in ensuring that state examiners have access to BCFP training. “We understand it has been difficult for state examiners to access Bureau of Consumer Financial Protection (BCFP) training,” Roulhac said. “Since some credit unions are subject to BCFP authority and the bureau has indicated it will rely SSAs more in the future, SSA examiners should be trained on BCFP’s examination practices,” he said.
  • Recommended the agency provide funding necessary to work with states in replacing the Automated Integrated Regulatory Examination System (AIRES), first implemented in 1995 by NCUA for state and federal examiners. “As the agency consolidates its five regional offices into three, NCUA, SSAs and credit unions will rely on technology to transmit examination-related information,” he said. Working with states to implement AIRES replacement will “create more secure and efficient ways to share sensitive data and examination material between credit unions and regulators, and between states and NCUA,” he said.

This week’s budget briefing was the first held by the agency under the auspices of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155), which was signed into law in May by President Donald Trump. The law now requires NCUA to hold an annual, public hearing (or briefing) on its latest budget proposal, and to publish the budget in the Federal Register.

NCUA Budget and Supplementary Materials

Testimony by NASCUS VP Communications Shelton Roulhac


A proposal that could change the payday lending rule set to take effect next summer is expected to be out for comment by the spring of 2019, according to a blog post published by the BCFP this week on the agency’s fall regulatory agenda.

The agenda, which the bureau says it hopes to refine in the spring, currently lists numerous actions ahead addressing a review of rules required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) as well as rules changed under EGRRCPA this year.

The bureau noted that it is still under interim leadership [of Acting Director John (“Mick”) Mulvaney], is in the process of implementing various EGRRCPA requirements, and is conducting its first Dodd-Frank Act-required assessments of the effectiveness of prior “significant” rulemakings. BCFP said it is also analyzing more than 86,000 comments received in response to its “call for evidence” initiative earlier this year.

“Following consideration of these various initiatives, the Bureau expects to refine its rulemaking priorities no later than the Spring 2019 Agenda and will publish an updated statement of priorities at that time,” it says.

Among the priorities listed this week are:

  • Payday rule: The 2017 payday rule – titled the Payday,Vehicle Title, and Certain High-Cost Installment Loans and currently set to take effect Aug. 19, 2019 – will be the focus of a notice of proposed rulemaking “by no later than early 2019 that will address reconsideration of the rule on the merits as well as address changes to its compliance date,” the bureau said.
  • Debt collection: The bureau continues research and pre-rulemaking activities regarding the debt collection market, “which remains a top source of complaints to the Bureau,” the agency said. It also notes having received “encouragement from industry and consumer groups” to address how to apply the Fair Debt Collection Practices Act (FDCPA) to modern collection practices. “By March 2019, the Bureau expects to issue a Notice of Proposed Rulemaking addressing such issues as communication practices and consumer disclosures,” BCFP said.
  • “Abusive” practices: The bureau has been reexamining the requirements of the Equal Credit Opportunity Act (ECOA) concerning the “disparate impact doctrine” in light of recent Supreme Court case law and Congress’ disapproval of a prior bureau bulletin concerning indirect auto lender compliance with ECOA. “The Bureau is also considering how rulemaking may be helpful to further clarify the meaning of ‘abusiveness’ under the section 1031 of the Dodd-Frank Act,” it said.
  • HMDA collection and reporting: Rule changes to the Home Mortgage Disclosure Act (HMDA) data collection requirements, called for under EGRRCPA, will get additional action in the spring of 2019, the bureau said.
  • HMDA data disclosure: Following on a requirement of Dodd-Frank, the bureau plans to issue final guidance in the “next few months” to further implement a Dodd-Frank directive that the bureau modify or require modification of the public HMDA data for the purpose of protecting consumer privacy interests. 

BCFP Fall 2018 rulemaking agenda (Blog post)


The latest request for information (RFI) from the federal consumer protection bureau on its data collections is summarized by NASCUS, noting eight areas of feedback the agency is seeking. The summary, which looks at the BCFP’s RFI issued Sept. 28, notes the bureau is assessing the overall efficiency and effectiveness of it data governance program and its data collections in support of its overall work. The summary also notes that the agency released in conjunction with the RFI its Sources and Uses of Data of the Bureau of Consumer Financial Protection, a report describing sources and uses of the data that the agency collects, as well as the bureau’s data governance structure and processes governing the intake, use, access and disclosure of data. Comments in response to the RFI are due to the BCFP by Dec. 27.

NASCUS Summary: BCFP Request for Information Regarding Bureau Data Collections


A redesigned “InfoBase” website focusing on anti-money laundering and Bank Secrecy Act (AML/BSA) exam resources was introduced Thursday by the FFIEC, with a focus on sharing examination procedure information. The exam council said the new site ( would share bank exam information with examiners, financial institutions, the public, and other stakeholders.  “The FFIEC BSA/AML InfoBase was redesigned to improve the overall experience for users,” the agency said in a release. “The redesign improves site navigation, enhances search capabilities, provides mobile-friendly capability, and contains new functionality that allows users to download various sections of the FFIEC BSA/AML Examination Manual,” it said. According to the website, the concept for InfoBase was developed by the group’s Task Forces on Examiner Education and Supervision to provide field examiners at the regulatory agencies with an electronic source for training and distributing needed examination information.

FFIEC AML/BSA website, exam resources


A familiar face in state credit union regulation will be in a new place come this December when Michigan’s John Kolhoff moves to Texas to become state commissioner of credit unions. (In the photo: John Kolhoff as a key speaker this week at NASCUS-sponsored conferences in MI).

Kolhoff, now the special deputy director with the Michigan Department of Insurance and Financial Services (DIFS), is also chairman of the NASCUS regulator board, a position he will continue.

He will take his new post in Texas Dec. 3, replacing long-time commissioner Harold Feeney who is set to retire at the end of the year. Kolhoff has served the Michigan DIFS since 1994.

According to Texas Credit Union Commission Chair Allyson Morrow, Kolhoff (who will be the sixth credit union commissioner in the agency’s nearly 50 years) brings “a stellar leadership reputation, a wealth of credit union regulatory experience, and a passion for credit unions.” She described those attributes as “critical ingredients” for the department.

“While it will be difficult to imagine the Michigan DIFS without John leading the credit union program, he leaves an amazing legacy and I am thrilled that both the Texas Credit Union Department and the broader state credit union system will continue to benefit from John’s appointment,” said NASCUS President and CEO Lucy Ito.

ON THE ROAD: Two big events in MI …

NASCUS was in the Wolverine state this week, sponsoring (in conjunction with the Office of Credit Unions) Michigan Industry Day, and the Michigan Examiner School. The Industry Day – part of NASCUS’ series of credit union industry days across the country – provided an up-close look at the state regulatory agenda and practices to credit union board members and executive staff. The four-day Michigan Examiner School provided 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. 

Special thanks to our speakers for these events, including: Brian Knight, EVP and General Counsel, NASCUS; Ken Otsuka, Risk Management Senior Consultant, CUNA Mutual Group; Doug Roossien, Risk Management Consultant, CUNA Mutual Group; John Kolhoff, Director, MI Office of Credit Unions and Pat McPharlin, Director, MI Department of Insurance and Financial Services; Glory LeDu, CEO, LeagueInfoSight; Sarah Stevenson, MCUL; Laura Herrin, Treasury; Penny Wright, OFAS Director; Anne Brown, Senior Examiner, Office of Credit Unions; Angela Robinson, Supervisory Examiner, Office of Credit Unions; Leanne O’Brien, Assistant Director, Office of Credit Unions; Andrew Bedard, Corporate Activities and Risk Assessment Manager, Office of Credit Unions.


There’s much more to come on the NASCUS Education calendar for 2018, as early as next week and through the next two months, including:

  • Nov. 5-8, NASCUS/CUNA BSA Conference (Louisville, KY.);
  • Nov. 27-28, NASCUS Mortgage Symposium Part 3 (Needham, Mass.);
  • Dec. 4, Tennessee Directors’ College (Nashville, TN)


NASCUS’ Lucy Ito traveled west this week to NV and WA to participate in panel discussions and honor an outgoing regulator (and former NASCUS leader). In Las Vegas, she participated in a panel discussion at the Mountain West Credit Union Association’s (MWCUA) Directors Conference. In Tacoma, she attended an event honoring retiring Washington State DFI Director of Credit Unions Linda Jekel at the Northwest Credit Union Association’s (NWCUA) MAXX 2018 convention; the convention agenda also featured an update state and federal regulators.

BRIEFLY: Economist Monaco now McWatters’ acting COS; disaster assistance tips from SBA; NASCUS 101 –just 2 weeks away!

NCUA Chief Economist Ralph Monaco has added another title: Acting chief of staff to Chairman Mark McWatters; the chairman announced the appointment at the NCUA Board meeting Thursday. Monaco, chief economist at the agency since 2015, replaces Sarah Vega as the chairman’s staff chief; she announced last week she had accepted a job at the Cooperative Credit Union Association (CCUA), a state trade group of Delaware, Massachusetts, New Hampshire and Rhode Island credit unions … The Small Business Administration (SBA) offers disaster assistance in the form of low-interest loans to businesses, renters, and homeowners located in regions affected by declared disasters – particularly hurricanes -- and has a developed a video (featuring SBA Administrator Linda McMahon) explaining how the agency can help. "You're not alone,"  McMahon's says in the short presentation to those affected by Hurricane Florence and Hurricane Michael (click on the photo to see the video) … It’s just two weeks away: The Nov. 1 “NASCUS 101,” a no-charge event featuring an overview of the rewards of membership in the association. Learn more about NASCUS and the benefits it offers to credit unions and other state credit union system players – directly from those who reap those benefits. Other segments of the event include those focusing on NASCUS’ unique leadership composition of two groups: state regulator board of directors and credit union advisory council; and the association’s unique membership model that includes state regulatory agencies, credit unions, credit union leagues, and industry partners (associate members).

Info/registration for NASCUS 101; Thursday, Nov. 1, 2-3 p.m. ET

Information Contact:
Patrick Keefe,