The Board is of the view that complex credit unions with two per cent or less of their assets consisting of goodwill and other intangible assets would not hold less capital than below the risk-based capital ratio. In addition, it is estimated that the two percent threshold would not exclude complex credit unions from the CCRLP framework as of June 30, 2021. Accordingly, CPPIB is of the view that a two per cent threshold strikes a balance between regulatory relief for most eligible complex credit unions and addressing the uncertainty and volatility of goodwill and other intangible assets. The Board is of the view that complex credit unions with high traffic and other intangible assets should calculate their capital adequacy using the risk-based capital ratio, as their portfolios may require higher levels of capital. In addition to meeting the comparability requirement of Section 216, the CCULR also meets the requirements of Section 216 of the FCUA for the NCUA risk-based net wealth framework. Section 216 contains two explicit provisions authorizing an NCUA analogue to CBLR – the definition of complex credit unions and the board`s mandate to draft a risk-based net asset requirement. In designing its ULCC framework, the Commission considered both its legal authority to exclude credit unions from risk-based net wealth requirements under the definition of complex and its authority to design a risk-based net asset system that has a higher net asset ratio instead of calculating an adjusted asset-based ratio. based on risk. [36] It should be noted that both rules require credit unions that take certain risks to hold capital commensurate with those risks. Section 216(d)(1) of the FCUA requires that the NCUA BCP system include, in addition to the legislated net wealth ratio, „a risk-based net wealth requirement[30] for credit unions that are complex as defined by the Board.“ [31] The FCUA directs the NCUA to base its definition of complex credit unions „on the credit unions` portfolios of assets and liabilities.“ [32] If a credit union is not classified as complex under the NCUA, it is not subject to a risk-based net worth requirement. In addition to giving the NCUA broad authority to determine which credit unions are complex and therefore subject to a risk-based net worth requirement, the FCUA also gives the NCUA broad authority to draft a risk-based net worth requirement that applies to these complex credit unions.

[33] Unlike the terms „net assets“ and „net wealth ratio“, the term „risk-based net wealth“ is not defined in the CCAF. Accordingly, section 216 provides the Commission with the authority to draft risk-based net worth requirements, provided that these requirements are comparable to those that apply to other federally insured deposit-taking institutions and are consistent with the requirements of the FCUA. The Board removed the written notification requirement for the rejection of the UNCLCC framework. As part of the CBLR of other bank branches, qualified banks that have opted for CBLR can withdraw from the framework at any time. The Commission agrees with the commentators and has agreed on the final rule with the CBLR. The Committee reconsidered its position for several reasons. First, the Commission is of the view that the transition from the CVAC to risk-based capital would be a rare activity and may have little benefit to the credit union. For any credit union that raises potential concerns, the NCUA may review its capital adequacy, including the choice of capital framework, as part of the normal supervisory process.

And the notification requirement in the proposed rule only provided that the NCUA would be provided 61 days in advance of the notice of time by the appeal report under the final rule. The Commission does not believe that this 61-day period warrants making all credit unions subject to the proposed notice. There is also no general requirement for credit unions to file a risk-based capital call reporting schedule before the first reporting period in March 2022 or if a credit union becomes complex and needs to calculate risk-based capital. The Commission is of the view that reporting is not required for credit unions that deviate from the CVRAC`s framework if the transition of complex new credit unions to the risk-based capital framework can be managed without notice. (1) General. Risk-weighted assets include the risk-weighted balance sheet assets described in paragraphs (c)(2) and (3) of this Section, plus the risk-weighted off-balance-sheet assets referred to in paragraph (c)(4) of this Section, plus the risk-weighted derivatives referred to in paragraph (c)(5) of this Section, less the counterpart deductions from the risk-based capital ratio in paragraph (b)(2) of this Division. If a particular asset, derivative contract or off-balance-sheet item has characteristics or characteristics that suggest that it could potentially fall into more than one risk weighting class, a credit union shall assign the asset, derivative contract or off-balance-sheet item to the risk weighting class that most accurately and appropriately reflects the associated credit risk. In contrast, one banking trading organization recommended that the board first subject credit unions to risk-based capital standards before implementing an option to join the LRCC framework. This argument appeared to be based primarily or exclusively on the fact that banks maintained risk-based capital before Congress and other banking agencies implemented the CBLR. The Commission found no new evidence or information that would justify not adopting the CCRAC framework now.

As discussed in the proposed rule and in this final preamble, a complex credit union that opts for the CVAC framework will generally increase the total capital requirement. The Commission continues to believe that the implementation of the CCRLP framework, as well as the 2015 final rule, will strike a balance between flexibility and choice of complex credit unions and overall capital certainty and soundness.