By Randy Karnes, CEO, CU*Answers

The NCUA Board approved amendments to 2015 risk-based capital final rule, delaying implementation until 2020 at the October board meeting and raising the minimum from $100 million to $500 million asset-sized credit unions.

Vic Pantea shared his thoughts on the decision to delay the rule’s effective date from January 2019 to January 2020:

“This action, in my humble opinion, will kill the entire risk-based capital rule for the immediate future. I see a purely political compromise here that allows both McWatters and Metsger to gain satisfaction. McWatters who argued strongly back in 2015 that the board did not have the authority to implement risk-based capital, cannot reverse implementation as long as Metsger, who voted with then-Chairman Debbie Matz at the time, is the other vote on a two-person board. But by getting the delay to 2020, we can assume that Rodney Hood will supply a second vote sometime during 2019 to eliminate the final rule, regardless of Metsger’s disposition as an expired board member or if his eventual replacement has been appointed. Metsger, as a consolation, can continue to say that for as long as he held office, he was a supporter of RBC and excessive agency overreach in the name of protecting the NCUSIF.”

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You’ve got to love politics… The pendulum between rules and tools swings back and forth based more on who has the last word than what is right. Always being last to the party on these kinds of things is a good bet. Picture all the effort and money that has been wasted in debating risk-based capital, the Current Expected Credit Loss model, and other regulatory divides in the last five years.

How many real issues might have moved forward if we had not stalled so many people in debating the ‘what if’s’ of fluff, risk management overreach, and style points for politicians? Imagine all the credit union leaders who were discouraged by the doomsday preached when the predictions of these changes doomed all small credit unions. Most of the debate was over late-to-the-party, overreactions to disasters already survived, and the idea that data and measurements can predict the unpredictable, low-probability events called life.

My advice: Live by the creed of “do valuable things and good things will happen” as credit union leaders. Let’s find a way to never be herded into a corner again by those who garner our attention over shuffling paper, debate the inconsequential, and doom us with protection from it-could-have-been-worse insurance policies.

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