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NCUA Building 'New Risk-Based Capital Framework'

Standard Tailored to Credit Unions 'Makes Sense for Today and Tomorrow'

BOSTON, Mass. (July 12, 2013) – Calling the agency’s one-size-fits-all capital requirement “outdated and insufficient,” National Credit Union Administration Board Chairman Debbie Matz said NCUA will build a “new risk-based capital framework” tailored to protect the industry and consumers from losses.

She said the current seven percent leverage capital standard, set by Congress in 1998, “was really just a best guess” at future requirements to protect safety and soundness. The recent financial crisis and industry changes, she asserted, require a modern approach.

“Job one is preventing another crisis,” Matz said. “One of the most important things we need to do to ensure a sound future is to revisit capital requirements. Our challenge is to make sure that, in the future, credit unions that choose to take on higher risks will be required to meet higher capital standards.”

While reaffirming that Basel III is not right for the credit union industry, Matz noted NCUA has a responsibility to ensure the agency’s safety and soundness standards evolve along with credit unions.

  • The full text of the Chairman’s speech is available here.
  • Read the NCUA release here.

Tags: capital reform, NCUA

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