The NCUA board voted 2-1, with Mark McWatters casting the dissenting vote, to pass a risk-based capital rule for credit unions. NCUA Board Chairman Debbie Matz said that the new rule took into consideration the more than 2,000 comment letters from credit unions and concerns from lawmakers. She said the NCUA has legal authority to create a rule and that the rule will keep credit unions safe.
Here’s a look at some of the changes in the new rule:
- Risk weight for equity investments in CUSOs, corporate perpetual contributed capital, and other higher risk equity investments were reduced to 100 percent if the total of equity exposure is less than 10 percent of the sum of the credit union’s capital elements of the risk-based capital ratio numerator.
- The charitable donation accounts risk weight was reduced to 100 percent.
- Principal-only, mortgage-backed security STRIPS were assigned a risk weight based on the underlying collateral.