13498 Federal Register / Vol. 86, No. 44 / Tuesday, March 9, 2021 / Proposed Rules 

1Public Law 105–219, 112 Stat. 913 (1998). 

2The FCUA is codified at 12 U.S.C. 1751 et seq. 

Section 216 of the act is codified at 12 U.S.C. 

1790d. 

3 12 U.S.C. 1790d(e), (f), (g), (i); 12 U.S.C. 

1786(h)(1)(F), 1787(a)(3)(A). 

4 12 U.S.C. 1790d(b)(1)(A). Section 38 of the FDI 

Act, 12 U.S.C. 1831o, was added by section 131 of 

the Federal Deposit Insurance Corporation 

Improvement Act, Public Law 102–242, 105 Stat. 

2236 (1991). 

5 12 U.S.C. 1790d(d)(1). 

6 12 U.S.C. 1790d(d). 

7 65 FR 8560 (Feb. 18, 2000). 

8 80 FR 66626 (Oct. 29, 2015). 

Authority: 12 U.S.C. 1761a, 1761b, 

1766(a), 1766(h), 1789(a)(11). 

§ 713.6 [Amended] 

■ 12. Amend § 713.6 by removing the 

word, ‘‘CAMEL’’, and adding, in its 

place, the word, ‘‘CAMELS’’, wherever 

it appears. 

[FR Doc. 2021–01396 Filed 3–8–21; 8:45 am] 

BILLING CODE 7535–01–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Parts 702 and 703 

[NCUA–2021–0010] 

RIN 3133–AF35 

Simplification of Risk Based Capital 

Requirements 

AGENCY: National Credit Union 

Administration. 

ACTION: Advance notice of proposed 

rulemaking. 

SUMMARY: The National Credit Union 

Administration (NCUA) Board (Board) 

is issuing this advance notice of 

proposed rulemaking (ANPR) to solicit 

comments on two approaches to 

simplify its risk-based capital 

requirements. The Board’s risk-based 

capital requirements are set forth in a 

final rule dated October 29, 2015, which 

is currently scheduled to become 

effective on January 1, 2022. The 

delayed effective date has provided the 

Board with additional time to evaluate 

the capital standards for federallyinsured credit unions (FICUs) that are 

classified as ‘‘complex’’ (those with total 

assets greater than $500 million). The 

first approach would replace the riskbased 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 riskbased capital rule 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. 

DATES: Comments must be received on 

or before May 10, 2021. 

ADDRESSES: You may submit comments, 

by any of the following methods (Please 

send comments by one method only): 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. The docket 

number for this advance notice of 

proposed rulemaking is NCUA–2021– 

0010. Follow the instructions for 

submitting comments. 

• Fax: (703) 518–6319. Include 

‘‘[Your name] Comments on 

‘‘Simplification of Risk Based Capital 

Requirements’’ in the transmittal. 

• Mail: Address to Melane Conyers 

Ausbrooks, Secretary of the Board, 

National Credit Union Administration, 

1775 Duke Street, Alexandria, Virginia 

22314–3428. 

• Hand Delivery/Courier: Same as 

mail address. 

Public inspection: All public 

comments are available on the Federal 

eRulemaking Portal at http://

www.regulations.gov as submitted, 

except as may not be possible for 

technical reasons. Public comments will 

not be edited to remove any identifying 

or contact information. 

Due to social distancing measures in 

effect, the usual opportunity to inspect 

paper copies of comments in the 

NCUA’s law library is not currently 

available. After social distancing 

measures are relaxed, visitors may make 

an appointment to review paper copies 

by calling (703) 518–6540 or emailing 

OGCMail@ncua.gov. 

FOR FURTHER INFORMATION CONTACT: 

Policy: Thomas Fay, Director, Division 

of Capital Markets, Office of 

Examination and Insurance, at (703) 

518–1179; Legal: Rachel Ackmann, at 

(703) 548–2601 or Ariel Pereira, at (703) 

548–2778; or by mail at National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314. 

SUPPLEMENTARY INFORMATION: 

I. Background 

II. This ANPR 

III. Legal Authority 

IV. Risk-Based Leverage Ratio (RBLR) 

V. Complex Credit Union Leverage Ratio 

(CCULR) 

VI. Timeline 

VII. Conclusion 

I. Background 

Capital adequacy standards are a 

prudential tool to protect the safety and 

soundness of individual credit unions 

and the credit union system as a whole. 

Capital serves as a buffer for credit 

unions to prevent institutional failure 

during times of stress. During a financial 

crisis, a buffer can mean the difference 

between the financial institution 

surviving or failing. Higher levels of 

capital insulate credit unions from the 

effects of adverse developments in 

assets and liabilities, allowing credit 

unions to continue to serve as credit 

providers during times of stress without 

government intervention. Higher levels 

of capital also reduce the probability of 

a systemic crisis, producing benefits 

that generally outweigh the associated 

costs. 

On August 7, 1998, Congress enacted 

the Credit Union Membership Access 

Act (CUMAA).1 CUMAA addressed 

credit union capital adequacy standards 

by adding section 216 to the Federal 

Credit Union Act (FCUA).2 Section 216 

directed the Board to adopt a regulation 

to establish a system of prompt 

corrective action (PCA) to restore the net 

worth of all FICUs if they are 

inadequately capitalized. Section 216 

requires supervisory actions indexed to 

five statutory net worth categories, 

ranging from well capitalized to 

critically undercapitalized. The 

mandatory actions and conditions 

triggering conservatorship and 

liquidation are expressly prescribed by 

statute.3 To supplement the mandatory 

actions, section 216 charged the NCUA 

with developing discretionary actions 

which are comparable to the 

discretionary safeguards available under 

section 38 of the Federal Deposit 

Insurance Act—the statute that applies 

PCA to other federally insured 

depository institutions.4

Section 216(d)(1) of the FCUA 

requires that the NCUA’s PCA system 

include, in addition to the statutorily 

defined net worth ratio requirement, ‘‘a 

risk-based net worth requirement’’ for 

credit unions that are complex, as 

defined by the Board.5 The FCUA 

directs the NCUA to base its definition 

of ‘‘complex’’ credit unions ‘‘on the 

portfolios of assets and liabilities of 

credit unions.’’ 6 If a credit union is not 

classified as complex, as defined by the 

NCUA, it is not subject to a risk-based 

net worth requirement. The NCUA 

implemented the regulatory PCA system 

mandated by section 216 through a final 

rule published on February 18, 2000.7

The NCUA’s PCA regulations are 

codified in 12 CFR part 702. 

Following the 2007–2009 recession, 

the NCUA substantially reevaluated the 

capital adequacy standards codified in 

part 702. On October 29, 2015, the 

Board published a final rule 

restructuring the PCA regulations (2015 

Final Rule).8 The overarching intent of 


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9See 12 U.S.C. 1782(c)(2)(A). The FCUA requires 

that each FICU pay an insurance premium equal to 

a percentage of the FICU’s insured shares to 

establish sufficient reserves in the NCUSIF to pay 

potential share insurance claims, and to provide 

assistance in connection with the liquidation or 

threatened liquidation of FICUs in troubled 

condition. 

10For purposes of this ANPR, the term ‘‘riskbased net worth requirement’’ is used in reference 

to the statutory requirement for the Board to design 

a capital standard that accounts for variations in the 

risk profile of complex credit unions. The term 

‘‘risk-based capital ratio’’ is used to refer to the 

specific standards established in the 2015 Final 

Rule to function as criteria for the statutory riskbased net worth requirement. The term ‘‘risk-based 

capital ratio’’ is also used by the other banking 

agencies and the international banking community 

when referring to the types of risk-based 

requirements that are addressed in the 2015 Final 

Rule. This change in terminology throughout the 

ANPR is intended only to reduce confusion for the 

reader. 

11The Federal Reserve Board and OCC issued a 

joint final rule on October 11, 2013 (78 FR 62018), 

and the FDIC issued a substantially identical 

interim final rule on September 10, 2013 (78 FR 

55340). On April 14, 2014 (79 FR 20754), the FDIC 

adopted the interim final rule as a final rule with 

no substantive changes. 

12See, supra note 8. 

13 83 FR 55467 (Nov. 6, 2018). 

14 84 FR 68781 (Dec. 17, 2019). 

15 Id. at 68782. 

16 Id. 

17 Id. 

18 12 U.S.C. 1752–1775. 19 12 U.S.C. 1766(a). 20Other provisions of the FCUA providing the 

Board with specific rulemaking authority include 

section 207 (12 U.S.C. 1787), which is a specific 

grant of authority over share insurance coverage, 

conservatorships, and liquidations. Section 209 (12 

U.S.C. 1789) grants the Board plenary regulatory 

authority to issue rules and regulations necessary or 

appropriate to carry out its role as share insurer for 

all FICUs. 

the 2015 Final Rule was to reduce the 

likelihood that a relatively small 

number of high-risk credit unions 

would exhaust their capital and cause 

large losses to the National Credit Union 

Share Insurance Fund (NCUSIF). Under 

the FCUA, FICUs are collectively 

responsible for replenishing losses to 

the NCUSIF.9

The 2015 Final Rule restructured the 

NCUA’s current capital adequacy 

regulations and made various revisions, 

including amending the agency’s riskbased net worth requirement, by 

replacing a credit union’s risk-based net 

worth ratio with a risk-based capital 

ratio.10 The risk-based capital 

requirements in the 2015 Final Rule are 

more consistent with the NCUA’s riskbased capital ratio measure for corporate 

credit unions, and are more comparable 

to the risk-based capital measures 

implemented by the Federal Deposit 

Insurance Corporation (FDIC), Board of 

Governors of the Federal Reserve 

System (Federal Reserve Board), and 

Office of the Comptroller of Currency 

(OCC) (collectively, the other banking 

agencies).11

The risk-based capital provisions of 

the 2015 Final Rule apply only to credit 

unions that are ‘‘complex,’’ which the 

rule defined as those with total assets 

over $100 million.12 On November 6, 

2018,13 the Board published a 

supplemental final rule that raised the 

threshold level for a ‘‘complex’’ credit 

union to $500 million (2018 

Supplemental Rule). Therefore, only 

credit unions with over $500 million in 

assets are now subject to the risk-based 

capital requirements of the 2015 Final 

Rule. The 2018 Supplemental Rule also 

delayed the effective date of the 2015 

Final Rule for one year (from January 1, 

2019, to January 1, 2020). 

The effective date was delayed a 

second time through a final rule 

published on December 17, 2019 (2019 

Supplemental Rule).14 The amendments 

are now scheduled to become effective 

on January 1, 2022. The delay has 

provided credit unions and the NCUA 

with additional time to implement the 

2015 Final Rule. Further, as explained 

in the 2019 Supplemental Rule, the 

delay provided the Board additional 

time to evaluate the NCUA’s capital 

standards for credit unions.15 The 2019 

Supplemental Rule provided several 

examples of issues the Board would 

consider during the delay, including 

asset securitization, the implementation 

of the Financial Accounting Standards 

Board’s final current expected credit 

loss (CECL) methodology, and 

amendments to the 2015 Final Rule for 

subordinated debt. Additionally, the 

delay provided additional time for the 

NCUA to prepare for internal 

modernization projects to support the 

2015 Final Rule.16 The proposed rule 

also stated the Board would use the 

delay to consider whether a community 

bank leverage ratio (CBLR) analog 

should be integrated into the NCUA’s 

capital standards.17

II. This ANPR 

The ANPR is an invitation from the 

Board to participate in shaping potential 

changes to the 2015 Final Rule. The 

Board has interacted with stakeholders 

on the subject of capital requirements 

going back to 1998, when Congress 

established the PCA requirements for 

FICUs. There have been several NCUA 

rulemakings regarding capital 

requirements since 1998. Stakeholders 

have made it clear to the Board that any 

capital requirements should be: Tailored 

to the unique risks of credit unions; 

simple in structure; and, designed to 

avoid unnecessary regulatory burden. 

This consistent feedback, tempered by 

the Board’s ongoing commitment to 

adapt and improve capital standards 

based upon stakeholder input and 

lessons learned, remains a driving 

impetus behind this ANPR. 

As noted above, this ANPR invites 

comments on the RBLR and CCULR 

approaches to the risk-based capital 

requirements. The RBLR approach 

would replace the 2015 Final Rule in its 

entirety. The RBLR approach uses 

relevant risk attribute thresholds to 

determine which complex FICUs would 

be required to hold an additional capital 

buffer above what is currently specified 

in the PCA regulations. The CCULR 

approach would retain the 2015 Final 

Rule, but would enable eligible complex 

FICUs to opt-into a framework to meet 

all regulatory capital requirements. 

Accordingly, the two approaches 

outlined are mutually exclusive, and the 

CCULR would not be available under 

the RBLR. 

This ANPR also poses questions 

designed to garner critical insight into 

how stakeholders view the implicit 

tradeoff between a reduction in the 

complexity and burden of the capital 

requirements in exchange for holding 

potentially higher amounts of 

mandatory capital above the seven 

percent net worth ratio necessary to be 

classified as well capitalized. The Board 

would benefit from hearing the views of 

FICUs on these possible enhancements 

now, to allow time to disseminate one 

of these approaches before the 2015 

Final Rule is scheduled to take effect. 

The Board also invites any other 

recommendations that might similarly 

provide regulatory relief without 

diminishing the efficacy of its capital 

regulation and standards. 

III. Legal Authority 

The Board is issuing this ANPR 

pursuant to its authority under the 

FCUA. Under the FCUA, the NCUA is 

the chartering and supervisory authority 

for Federal credit unions and the federal 

supervisory authority for state-chartered 

FICUs.18 The FCUA grants the NCUA a 

broad mandate to issue regulations 

governing both Federal credit unions 

and all FICUs. For example, section 120 

of the FCUA is a general grant of 

regulatory authority and authorizes the 

Board to prescribe rules and regulations 

for the administration of the FCUA.19

Other provisions of the FCUA, such as 

section 216, confer specific rulemaking 

authority to address prescribed issues or 

circumstances.20 Accordingly, the 

FCUA grants the Board broad 

rulemaking authority to protect the 

safety and soundness of the credit union 

industry and the NCUSIF. This ANPR is 

being issued under both the general 


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rulemaking authority conferred by 

section 120 of the FCUA and as 

discussed in this preamble, the more 

specific grant of authority under section 

216. 

IV. Risk-Based Leverage Ratio (RBLR) 

A. Overview of RBLR Approach 

As an alternative to the 2015 Final 

Rule, the Board is seeking comment on 

a simplified capital framework that 

satisfies the risk-based net worth 

requirement for complex FICUs. The 

Board’s intention for the RBLR approach 

is to simplify the regulatory risk-based 

capital requirements, while ensuring the 

overall capital framework: 

(1) Complies with all applicable 

statutory and legal requirements, 

including the statutory PCA 

requirements; 

(2) is easier to understand and use; 

and 

(3) effectively identifies risk 

characteristics that trigger 

commensurate capital requirements. 

The RBLR approach would utilize 

certain risk characteristics to determine 

the required capital level. This approach 

differs from the 2015 Final Rule, where 

all assets and certain off-balance sheet 

activities are categorized into risk 

groups and then risk-weighted to 

produce a risk-based ratio. The Board is 

also considering using the net worth 

ratio as the RBLR measurement, which 

is already a well-established, simplified, 

and observable measurement. The net 

worth ratio would be supplemented 

with mandatory capital buffers when 

certain risk factors are triggered. This 

approach, illustrated in the chart below, 

would require an extra cushion of 

capital buffers over and above the seven 

percent net worth ratio standard for 

classification as well capitalized when 

certain characteristics inherent in a 

FICU’s balance sheet exceed specified 

thresholds. The amount of the capital 

buffer would be a discreet percentage of 

net worth-to-total assets over seven 

percent and would be a mandatory 

capital requirement. 

The Board is considering basing the 

RBLR risk factors on the asset categories 

from the 2015 Final Rule, which utilize 

higher risk weightings. For example, 

there are a number of risk-based capital 

categories under the 2015 Final Rule 

that receive a risk weighting greater than 

100 percent. These categories include: 

• Non-current loans, 

• commercial loans exceeding 50 

percent of assets, 

• junior lien real estate loans 

exceeding 20 percent of assets, 

• mortgage servicing rights, and 

• other investment activities. 

The Board may also consider other 

asset concentration risk factors in 

developing risk thresholds. 

As previously mentioned, the Board 

seeks a reduction in the administrative 

burden of categorizing all assets and offbalance balances into risk categories. 

The RBLR approach would identify 

certain risk factors and establish 

thresholds that would trigger a capital 

buffer. The buffer amount might also 

vary based on the level of the applicable 

threshold. For example, if a FICU held 

a certain amount of commercial loans as 

a percentage of assets that triggered a 

‘‘Buffer A’’ capital requirement, then the 

FICU would be required to hold a higher 

net worth ratio to maintain a wellcapitalized classification. However, if a 

second and higher threshold were 

established for commercial loans, then it 

is possible that the FICU will be 

required to hold an additional amount 

of capital above the first buffer amount 

(Buffer B). 

The Board’s intention is that the 

RBLR will streamline compliance with 

capital requirements without sacrificing 

the safety and efficacy of the overall 

capital regime. As envisioned, the 

greater simplicity would come from 

converting the current computational 

framework for complex credit unions 

into a three-tiered system of minimum 

leverage ratios for all complex FICUs. 

The minimum leverage ratio necessary 

to be well capitalized under RBLR 

would remain at seven percent, with 

two higher tiers applied to those 

complex credit unions exhibiting 

quantified amounts of higher relative 

risk. The defining risk attributes would 

be a function of the types and 

concentration of underlying assets. 

Basing the RBLR on the net worth 

ratio would significantly reduce the Call 

Report requirements and utilize a 

measurement that FICUs are already 

familiar with. However, while an RBLR 

approach would be simpler, it may also 

result in a higher capital requirement for 

certain FICUs that have riskier assets 

when compared to the risk-based capital 

framework. The Board welcomes input 

on which asset types and concentrations 

stakeholders view as most significant to 

establish capital buffers in excess of the 


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21The final rule was approved by the Board at the 

December 17, 2020 meeting. See, https://

www.ncua.gov/files/agenda-items/ 

AG20201217Item5b.pdf. 

22Subject to a 20 percent per annum discounting 

of outstanding Subordinated Debt once the 

remaining maturity is less than five years. 

23Public Law 115–174 (May 24, 2018). Section 

201 is codified at 12 U.S.C. 5371 note. 

24 84 FR 61776 (Nov. 13, 2019). 

25Under section 4012 of Public Law 116–136 

(Mar. 27, 2020), the CBLR was temporarily set to 

8 percent. See, 85 FR 22924 (Apr. 23, 2020). Under 

the statute, the temporary CBLR of 8 percent 

expired on December 31, 2020. The CBLR will 

transition back to 9 percent during calendar year 

2021. See, 85 FR 22930 (Apr. 23, 2020). 

26Advanced approaches banking organizations 

are generally those with at least $250 billion in total 

consolidated assets or at least $10 billion in total 

on-balance sheet foreign exposure, and depository 

institution subsidiaries of those firms. 

27As noted previously, this is the statute that 

applies PCA to federally insured depository 

institutions, as defined under the Federal Deposit 

Insurance Act. 

28Supra, note 22. 

29See, 85 FR 22924 (Apr. 23, 2020). 

seven percent threshold. The Board also 

welcomes views on the practicality of 

having discreet thresholds above seven 

percent to guard against higher risk, and 

striking the right balance between 

adequate buffers and the efficient 

allocation of capital. 

Question 1: The Board invites 

comments on the merits of 

incorporating the RBLR approach as an 

alternative to the risk-based capital 

framework under the 2015 Final Rule. 

What risk characteristics should be 

incorporated into the RBLR? Are the 

higher risk-weighted asset categories 

from the risk-based capital framework 

the correct starting point, or should the 

Board consider a different approach? 

Question 2: The Board invites 

comments on what risk thresholds 

should be used for the risk factors. What 

measurements should be used and how 

would the measurement be reported and 

monitored? Should there be more than 

one capital buffer for a risk factor based 

on the measurement? How would 

multiple measurements be combined or 

weighted to determine the threshold? 

Question 3: The Board invites 

comments on what capital buffers over 

the well-capitalized seven percent 

threshold should be used? 

B. Impact of RBLR on Subordinated 

Debt Final Rule 

The Board recognizes that any 

changes to the regulatory capital 

framework have potential consequences 

for other NCUA rulemakings. Other than 

the changes required to implement any 

regulatory capital framework changes, 

the Board believes the RBLR approach 

would require the NCUA to modify its 

recent final rulemaking regarding 

subordinated debt (Subordinated Debt 

Rule).21 The Subordinated Debt Rule is 

a direct amendment to the 2015 Final 

Rule. As such, elimination of the 2015 

Final Rule would alter the form and 

structure of the Subordinated Debt Rule. 

Further, the current Subordinated Debt 

Rule allows a complex credit union that 

is not designated as a ‘‘low-income 

credit union’’ (LICU) to issue 

subordinated debt to include in the riskbased capital numerator.22 In an RBLR 

approach, non-LICU complex credit 

unions may or may not be able to apply 

subordinated debt towards a capital 

calculation, depending on the ultimate 

design of the approach and the relevant 

legal and policy considerations. 

The Board would be required to 

evaluate the ability of non-LICU 

complex credit unions to use a 

subordinated debt instrument for the 

RBLR, as the FCUA includes a 

definition of ‘‘net worth,’’ which only 

allows LICUs to include such 

instruments in their net worth. The 

potential absence of utility for non-LICU 

complex credit unions and the 

structural changes resulting from the 

repeal of the 2015 Final Rule may 

require amendments to the 

Subordinated Debt Rule. However, the 

Board notes the Subordinated Debt rule 

would not need to be modified with 

respect to non-complex LICUs and new 

credit unions. Changes to the 

Subordinated Debt rule would be 

focused on moving the rule from its 

current location in the 2015 risk-based 

capital rule, removing references to the 

risk-based capital rule, and amending 

the rule for possible use by complex 

credit unions of Subordinated Debt to 

meet any proposed RBLR. 

Question 4: The Board invites 

comments on how a non-LICU complex 

credit union may be able to apply 

subordinated debt towards an RBLR 

capital calculation. 

V. Complex Credit Union Leverage 

Ratio (CCULR) 

Section 201 of the Economic Growth, 

Regulatory Relief, and Consumer 

Protection Act directed the other 

banking agencies to propose a 

simplified, alternative measure of 

capital adequacy for certain federally 

insured banks.23 On November 13, 

2019, the other banking agencies issued 

a final rule implementing this statutory 

directive (CBLR Final Rule).24

The CBLR is an optional framework to 

the risk-based capital requirements for 

depository institutions and depository 

institution holding companies that meet 

the following criteria: 

1. A leverage ratio (equal to tier 1 

capital divided by average total 

consolidated assets) of greater than nine 

percent; 25

2. Total consolidated assets of less 

than $10 billion; 

3. Total off-balance sheet exposures of 

25 percent or less of its total 

consolidated assets; 

4. Trading assets plus trading 

liabilities of five percent or less of its 

total consolidated assets; and 

5. Not an advanced approaches 

banking organization.26

The CBLR Final Rule refers to the 

depository institutions and depository 

institution holding companies that meet 

these regulatory criteria as ‘‘qualifying 

community banking organizations.’’ 

Qualifying community banking 

organizations that opt into the CBLR 

framework are considered to be in 

compliance with the other banking 

agencies’ generally applicable risk-based 

and leverage capital requirements. 

Further, for the purposes of section 38 

of the Federal Deposit Insurance Act,27

these qualifying banking organizations 

will have met the well-capitalized ratio 

requirements. In exchange, the 

qualifying banking organization must 

maintain a greater amount of capital 

than normally required to be deemed 

well capitalized. Qualifying community 

banking organizations may opt into or 

out of the CBLR framework at any time. 

The CBLR Final Rule includes a twoquarter grace period during which a 

qualifying community banking 

organization that temporarily fails to 

meet any of the qualifying criteria, 

including the greater than nine percent 

leverage ratio requirement, will still be 

deemed well capitalized. However, the 

qualifying community banking 

organization must maintain a leverage 

ratio greater than eight percent. At the 

end of the grace period, the banking 

organization must meet all qualifying 

criteria to remain in the CBLR 

framework or otherwise must comply 

with and report under the generally 

applicable risk-based and leverage 

capital requirements. Similarly, a 

banking organization that fails to 

maintain a leverage ratio greater than 

eight percent will not be permitted to 

use the grace period and must comply 

with the generally applicable capital 

requirements and file the appropriate 

regulatory reports. 

In March 2020, the CBLR was 

temporarily set to eight percent by 

statute.28 Accordingly, effective the 

second quarter of 2020, the CBLR 

requirement was eight percent or 

greater.29 Banking organizations are still 


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30See, 85 FR 22930 (Apr. 23, 2020). 

subject to a two-quarter grace period if 

they do not meet any of the eligibility 

criteria and may remain under the CBLR 

framework, provided that their leverage 

ratio is above seven percent during the 

grace period. Beginning in 2021, the 

CBLR requirement will be 8.5 percent or 

greater and the minimum requirement 

during the grace period will be 7.5 

percent.30 Beginning in 2022, the CBLR 

requirement will return to nine percent 

and the minimum requirement during 

the grace period will return to eight 

percent. 

In the preamble to the 2019 

Supplemental Rule, the Board explained 

that it might consider a capital standard 

analog to the CBLR framework 

developed by the other banking 

agencies—referred to in this ANPR as 

CCULR. The CCULR approach would be 

based on the principles of the CBLR 

framework and, for complex credit 

unions that meet specified qualifying 

criteria and have opted into the 

approach, would provide relief from the 

requirement to calculate a risk-based 

capital ratio, as implemented by the 

2015 Final Rule. In exchange, the 

qualifying complex credit union would 

be required to maintain a higher net 

worth ratio than is otherwise required 

for the well-capitalized classification. 

This is a similar trade-off to the one 

made by qualifying community banking 

organizations under the CBLR. 

As noted above, the 2015 Final Rule 

is scheduled to take effect on January 1, 

2022. Accordingly, a CCULR approach 

would be parallel to the 2015 Final Rule 

and would not take effect until January 

1, 2022. Qualifying complex credit 

unions would not be able to opt into the 

proposed CCULR approach prior to this 

effective date. 

In designing the CCULR, the Board 

would seek to further the goal of the 

FCUA’s PCA requirements by requiring 

that complex credit unions continue to 

hold capital commensurate with their 

risks, while minimizing the burden 

associated with complying with the 

NCUA’s risk-based capital requirement. 

The Board welcomes comments on a 

possible adoption of the CCULR and, in 

particular, seeks input on the following 

issues: 

Question 5: The Board invites 

comments on the merits of 

incorporating the CCULR in its capital 

adequacy regulations. Should the NCUA 

capital framework be amended to adopt 

an ‘‘off-ramp’’ such as the CCULR to the 

risk-based capital requirements of the 

2015 Final Rule? 

Question 6: The Board invites 

comment on the criteria for CCULR 

eligibility. Should the Board adopt the 

same qualifying criteria as established 

by the other banking agencies for the 

CBLR? In recommending qualifying 

criteria regarding a credit union’s risk 

profile, please provide information on 

how the qualifying criteria should be 

considered in conjunction with the 

calibration of the CCULR level under 

question 7, below. 

Question 7: What assets and liabilities 

on a FICU’s Call Report should the 

Board consider in determining the net 

worth threshold? How should each of 

these items be weighted? 

Question 8: What are the advantages 

and disadvantages of using the net 

worth ratio as the measure of capital 

adequacy under the CCULR? Should the 

Board consider alternative measures for 

the CCULR? For example, instead of the 

existing net worth definition, the CCULR 

could use the risk-based capital ratio 

numerator from the 2015 Final Rule, 

similar to the ‘‘Tier 1 Capital’’ measure 

used for banking institutions. 

Question 9: Should all complex credit 

unions be eligible for the CCULR, or 

should the Board limit eligibility to a 

subset of these credit unions? For 

example, the Board could consider 

limiting eligibility to the CCULR 

approach to only complex credit unions 

with less than $10 billion in total assets. 

Question 10: The Board invites 

comment on the procedures a qualifying 

complex credit union would use to opt 

into or out of the CCULR approach. 

What are commenters’ views on the 

frequency with which a qualifying 

complex credit union may opt into or 

out of the CCULR approach? What are 

the operational or other challenges 

associated with switching between 

frameworks? 

Question 11: The Board invites 

comment on the treatment for a 

complex credit union that no longer 

meets the definition of a qualifying 

complex credit union after opting into 

the CCULR approach. Should the Board 

consider requiring complex credit 

unions that no longer meet the 

qualifying criteria to begin to calculate 

their assets immediately according to 

the risk-based capital ratio? Should the 

Board provide a grace period for these 

credit unions to come back into 

compliance with the CCULR and, if so, 

how long of a grace period is 

appropriate? What other alternatives 

should the Board consider with respect 

to a complex credit union that no longer 

meets the definition of a qualifying 

complex credit union and why? Is 

notification that a credit union will not 

meet the qualifying criteria necessary? 

VI. Timeline 

As discussed above, the 2015 Final 

Rule will be effective January 1, 2022. 

The Board expects that any final rule 

developed in response to this ANPR 

would be issued before the effective 

date of the 2015 Final Rule. 

Accordingly, the Board expects that any 

notice of proposed rulemaking issued in 

response to this ANPR would be issued 

by midyear of 2021. Once comments are 

received, the Board will evaluate the 

comments and direct NCUA staff to 

move forward in drafting any proposed 

rule to meet this timeline. 

VII. Conclusion 

The Board is committed to tailoring 

its capital requirements to the unique 

features of credit unions. The two 

approaches outlined in this ANPR are 

designed to accomplish this goal 

without reducing the effectiveness of 

the Board’s capital standards. The RBLR 

approach would replace the 2015 Final 

Rule risk-based capital requirements 

using relevant risk attribute thresholds 

that would require additional capital 

buffers. The CCULR would enable 

eligible complex FICUs to opt-into a 

framework to meet all regulatory capital 

requirements. The Board invites 

comments on these two options, as well 

as on any other recommendations that 

might similarly accomplish the goals 

outlined in this ANPR. All comments 

will be considered in the development 

of a future proposed rule. 

By the National Credit Union 

Administration Board, this 14th day of 

January, 2021. 

Melane Conyers Ausbrooks, 

Secretary of the Board. 

[FR Doc. 2021–01397 Filed 3–8–21; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2020–0991; Project 

Identifier AD–2020–00539–A] 

RIN 2120–AA64 

Airworthiness Directives; Mooney 

International Corporation Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: The FAA proposes to adopt a 

new airworthiness directive (AD) for 

certain Mooney International 


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