The NCUA Proposal In Brief

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Among NCUA's proposed changes for PCA:

* Recognizing the inherent limitations in any risk-based capital system, NCUA advocates a system involving complementary leverage and risk-based standards working in tandem;

* For the leverage requirement, NCUA advocates a reduction in the standard net worth ratio requirements for CUs to a level comparable to what is required of FDIC insured institutions.

* In order to achieve comparability between the federal insurance funds, it will be necessary to factor in the NCUSIF's deposit-based funding mechanism, but that in no way alters its treatment as an asset under generally accepted accounting principles, NCUA said.

* The proposal tailors the risk-asset categories and weights of BASEL II, as well as related aspects of the FDIC's PCA system, to the operation of credit unions, consistent with the federal banking regulators' recent similar announcement.

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