Policy for Setting the Normal Operating Level, 72279-72283 [2021-27639]

Agencies

• National Credit Union Administration

[Federal Register Volume 86, Number 242 (Tuesday, December 21, 2021)]
[Notices]
[Pages 72279-72283]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-27639]


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NATIONAL CREDIT UNION ADMINISTRATION


Policy for Setting the Normal Operating Level

AGENCY: National Credit Union Administration (NCUA).

ACTION: Notice.

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SUMMARY: In May 2021, the NCUA Board (Board) invited comment on the 
policy to set the National Credit Union Share Insurance Fund (Share 
Insurance Fund) Normal Operating Level (NOL). The Board requested 
comment on eight specific factors that impact the calculation of the 
NOL. This final notice responds to comments on these factors as well as 
other subjects on which the Board received comment in the notice.

FOR FURTHER INFORMATION CONTACT: Russell Moore or Amy Ward, Risk 
Analysis Officers, National Credit Union Administration, Office of 
Examination, and Insurance at (703) 518-6383 or (703) 819-1770.

SUPPLEMENTARY INFORMATION:

I. Background

    On September 28, 2017, the Board approved the following actions: 
\1\
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    \1\ 82 FR 46298 (Oct. 4, 2017).
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     Closing the Temporary Corporate Credit Union Stabilization 
Fund (Stabilization Fund) and distributing its funds, property, and 
other assets and liabilities to the Share Insurance Fund, effective 
October 1, 2017.
     Setting the NOL of the Insurance Fund to 1.39 percent, 
effective September 28, 2017.\2\
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    \2\ The Board last set the NOL at 1.38 percent on December 9, 
2019. The Board retained the 1.38 percent NOL at its December 17, 
2020, meeting.
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     Adopting the policy for setting the NOL, as outlined 
below.

Policy for Setting the NOL

    The policy for setting the NOL was adopted in 2017 and established 
a periodic review of the equity needs of the Share Insurance Fund, the 
results of which are communicated to stakeholders.\3\ At least 
annually, NCUA staff reviews the level at which the NOL is set and 
reports this information to the Board. Board action is only necessary 
when a change in the NOL is warranted. The policy establishes that any 
change to the NOL of more than one basis point shall be made only after 
a public announcement of the proposed adjustment, with an opportunity 
for comment.\4\ For any such adjustment, the NCUA would issue a report 
and request for comment that includes data supporting the proposed 
adjustment. The policy established the following objectives for the 
Board to satisfy when setting the NOL:
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    \3\ As noted, the Board adopted this policy for setting the NOL 
in 2017. The Board emphasizes that, as a general statement of the 
NCUA's policy regarding setting the NOL, the Board is not required 
to follow the notice-and-comment rulemaking process when revising 
this policy. See 5 U.S.C. 553(b)(3)(a). Nevertheless, the Board 
voluntarily solicited public input on this policy.
    \4\ One basis point is one hundredth of one percent.
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     Retain public confidence in federal share insurance;
     Prevent impairment of the one percent contributed capital 
deposit; \5\ and
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    \5\ Federally insured credit unions are required to maintain a 
deposit equal to one percent of their insured shares with the Share 
Insurance Fund. 12 U.S.C. 1782(c)(1)(A)(i).
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     Ensure the Share Insurance Fund can withstand a moderate 
recession without the equity ratio declining below 1.20 percent over a 
five-year period.
    The current economic landscape and pending resolution of the 
obligations associated with the corporate credit union asset management 
estates and NCUA Guaranteed Notes (NGN) Program, discussed later in 
this document, warrant a re-evaluation of the NCUA's current NOL 
policy.

II. Legal Authority

    Pursuant to the Federal Credit Union Act (Act), the NOL is an 
equity ratio specified by the Board, which may not be less than 1.20 
percent and not more than 1.50 percent.\6\ The Board has historically 
set the NOL as the target equity ratio for the Share Insurance Fund.
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    \6\ 12 U.S.C. 1782(h)(4).
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    The Share Insurance Fund's calendar year-end equity ratio is part 
of the statutory basis to determine whether the

[[Page 72280]]

NCUA must make a distribution to insured credit unions.\7\ The Act 
states:
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    \7\ The equity ratio is also part of the statutory basis for 
determining whether a premium or Share Insurance Fund restoration 
plan is necessary. The unprecedented share growth related to the 
pandemic resulted in an equity ratio of 1.26 percent as of December 
31, 2020, and an equity ratio of 1.23 percent as of June 30, 2021.
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    ``The Board shall [ . . . ] effect a pro rata distribution to 
insured credit unions after each calendar year if, as of the end of 
that calendar year--
     Any loans to the Fund from the Federal Government, and any 
interest on those loans, have been repaid;
     The Fund's equity ratio exceeds the [NOL] and
     The Fund's available assets ratio exceeds 1.0 percent.'' 
\8\
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    \8\ 12 U.S.C. 1782(c)(3)(A). This section is also subject to 12 
U.S.C. 1790e(e).
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    The above provisions of the Act are generally implemented at 12 CFR 
part 741 of the NCUA's regulations.

III. Current Normal Operating Level Methodology and Process

    To implement the current approved policy, the NCUA developed a 
calculation based on scenarios using the following factors:
     The modeled performance of the Share Insurance Fund over a 
five-year period, assuming a moderate recession.
     The modeled potential decline in value of the Share 
Insurance Fund's claims on the corporate asset management estates in a 
moderate recession; and
     The projected equity ratio decline through the end of the 
following year, assuming no economic downturn.
    The stress scenario entails estimating three primary drivers of 
outcomes: insurance losses, insured share growth, and yield on 
investments. Additionally, the risk associated with the Share Insurance 
Fund's claims on, and obligations related to, the asset management 
estates of the five failed corporate credit unions is a factor in this 
analysis. The Share Insurance Fund's exposure related to the asset 
management estates of the five failed corporate credit unions has 
substantially declined since the last NGN trust matured on June 12, 
2021. Though the amount of time needed to fully liquidate all the 
assets and satisfy all the liabilities of the corporate asset 
management estates will depend on market factors and ongoing 
litigation, the risk has significantly declined and will continue to 
decline and end as the residual assets are liquidated and the estates 
closed. More information regarding the NGN program and the Corporate 
System Resolution may be found on the NCUA's public website.
    The NCUA's stress analysis is based on the Federal Reserve's 
adverse economic scenario and applied to the primary drivers. However, 
the Federal Reserve did not publish an adverse scenario in 2020 or 
2021; therefore, the NCUA developed an adverse scenario based on the 
average of the Federal Reserve's baseline and severely adverse economic 
scenarios. Historically, this has been a reasonable proxy for a 
moderate recession. The absence of an adverse scenario published by the 
Federal Reserve and the pending completion of the corporate resolution 
program warrant a re-evaluation of the current NOL policy.

IV. Comments on Normal Operating Level and Responses

    The Board sought comment on the policy and approach for setting the 
NOL of the Share Insurance Fund. Commenters were encouraged to discuss 
any other relevant issues for the Board to consider. Specifically, the 
Board was interested in comments addressing the following factors:
     Should a moderate recession be the basis for evaluating 
the Share Insurance Fund performance during an economic downturn, or 
should the NCUA change the policy to consider a severe recession?
     What data source(s) should the NCUA use for determining 
the characteristics of a potential moderate or severe recession--the 
Federal Reserve scenario, an independent source, or the NCUA's 
judgment?
     Should the NCUA continue modeling the performance of the 
Share Insurance Fund over a five-year period? Should the period be 
longer or shorter?
     How should the NCUA utilize the modeled potential decline 
in value of the Share Insurance Fund's claims on the corporate asset 
management estates going forward, until the estates are fully resolved?
     Should the NCUA continue to incorporate in the NOL 
analysis the projected equity ratio decline through the end of the 
following year without an economic downturn? Should this period be 
longer or shorter, or not factored into the analysis at all?
     Given forecasting uncertainties and timing challenges, 
would it be reasonable for the NCUA to change the requirement to 
request public comment only if the NOL were to change by a larger 
amount than just one basis point?
     Should the NOL be re-evaluated in the midst of an economic 
downturn or should it be left unchanged until the onset of an economic 
recovery?
     Should the NOL be re-evaluated on qualitative factors 
based on the COVID-19 pandemic?
     Is there any other information that the Board should 
consider when setting the NOL?
    The Board received 23 comment letters from credit union leagues, 
trade associations, credit unions, and credit union service 
organizations.

Moderate or Severe Recession

    Most commenters stated a moderate recession is an appropriate basis 
for evaluating the Share Insurance Fund's performance during an 
economic downturn. Commenters who did not support using a severe 
recession cited the few numbers of severe recessions recorded in U.S. 
history and noted that the low probability of losses stemming from a 
severe economic event reduces the utility of a severe recession as a 
basis for modeling. The commenters noted that the majority of the 
losses to the Share Insurance Fund have been from fraud, concentration 
risk, etc., and not from severe economic factors; thus, a model based 
on a severe recession would not be useful. Commenters expressed that 
NCUA's own capital planning requirements for credit unions do not 
require credit unions to build capital to accommodate high impact, low 
probability events. The Board agrees with the commenters and will 
retain the moderate recession scenario as the basis for modeling the 
NOL.

Data Sources

    Commenters emphasized the need for NCUA to use an independent 
source to provide data for NCUA's modeling of a potential moderate or 
severe recession. The majority of commenters supported continuing to 
use the Federal Reserve as this independent source, due to its 
credibility in the industry and its wide use among other banking 
agencies. Several commenters favored an independent source other than 
the Federal Reserve or some combination of the Federal Reserve and 
independent sources. Most commenters recommended the Board not use NCUA 
judgement as an exclusive means for modeling a moderate and severe 
recession. Several commenters believed NCUA judgment would be 
acceptable as a backup means to define a moderate recession when the 
specific Federal Reserve scenario was not available.
    Several commenters did express concern that the Federal Reserve 
data includes bank losses, which historically have been greater than 
credit union losses, and the impact this would have on modeling for 
credit unions. The Board emphasizes the Federal Reserve

[[Page 72281]]

data used in the modeling process is broad macroeconomic assumptions 
and is not specific to any one industry. The Board believes the Federal 
Reserve scenarios are the best choice due to their public availability 
and wide acceptance. Other independent sources may not be readily 
available for public scrutiny or require subscriptions to be able to 
view. Based on the feedback, the Board believes the NCUA's methodology 
of using an average of the Federal Reserve's baseline and severely 
adverse scenarios to approximate a moderate recession is the best 
alternative.

Modeling Period

    While commenters supported the current use of a moderate recession 
in the modeling process, many commenters recommended the Board shorten 
its modeling period from the current policy of five years to a shorter 
period of 18 months to three years. Commenters suggested the current 
five-year period is no longer applicable because it was put in place in 
2017 to account for the remaining maturity of the NGN Program, which 
was set to mature in 2021. Commenters expressed that a shorter modeling 
period is also more appropriate because the duration of economic 
recessions was less than five years. Commenters emphasized the 
applicability of a shorter period, noting the Federal Reserve baseline 
and severely adverse recession scenarios are based on 13 quarter terms. 
Other commenters that supported using a longer period than five years 
suggested modeling consistent with business and economic cycle trends 
that typically exceed five years.
    The Board disagrees with commenters that state the Share Insurance 
Fund's performance horizon should be less than five years. As outlined 
in its July 2017 Notice and discussed at the July 2017 Board meeting, a 
five-year horizon for modeling the Share Insurance Fund was selected 
for several reasons. One compelling reason is that the National Bureau 
of Economic Research--the not-for-profit research organization that 
establishes the beginning and end of U.S. business cycles--has 
calculated that, from 1854 through 2020, the United States has averaged 
59 months from the peak of one business cycle to the next. If the 
modern era (1945 to 2020) is considered, this cycle extends to 75 
months.
    Though a recession may end, the economy may remain weak during the 
recovery period. A struggling economy also poses risks to credit 
unions, and a thorough analysis of the Share Insurance Fund's equity 
position needs to account for the period of continued economic 
weakness, which more realistically reflects a recession's effects on 
the credit union industry. A primary reason the NCUA's projections 
extend the Federal Reserve's 39-month (13 quarters) scenario to 60 
months is that it may take more than 39 months for the effects of the 
recession and the weak recovery to produce losses. Five years is also 
consistent with the agency's strategic planning cycle. Therefore, the 
Board plans to retain a modeling horizon of five years.

Potential Decline in Value of the Share Insurance Fund's Claims on the 
Corporate Asset Management Estates

    Many commenters recommended eliminating the modeled potential 
decline in value of the Share Insurance Fund's claims on corporate 
asset management estates since the estates are almost fully resolved 
and no longer pose a material impact to the modeled results. Commenters 
felt any remaining impact of the corporate resolution program is likely 
immaterial and therefore not needed in the analysis.
    The Board agrees with the commenters. The last NGN certificate 
matured in June of 2021. The remaining assets of the corporate asset 
management estates have not been fully liquidated yet, but the Board 
agrees this component in the NOL calculation can be eliminated as the 
exposure has significantly declined and will be fully resolved within 
the next modeling period.

Decline in the Equity Ratio Through the End of the Following Year 
Without an Economic Downturn

    The majority of comments on this issue supported eliminating the 
projected equity ratio decline from the NOL analysis through the end of 
the following year without an economic downturn. The rationale provided 
was the near completion of the NGN Program, which negates the need to 
analyze the projected equity ratio decline through the end of the 
following year as a backstop to ensure the Share Insurance Fund could 
stay above 1.2 percent under a moderate recession during the remaining 
life of the NGNs. One commenter supported retaining the analysis and 
suggested that the NCUA standardize the period used in the forecast.
    The Board agrees with the commenters. This component of the NOL 
calculation was originally intended to protect against a decline in the 
equity ratio while the NGNs were outstanding. The NGNs have all 
matured, and while there are remaining Legacy Assets, the impact of a 
decline in their value is no longer significant to this analysis.

Public Comment Only if the Normal Operating Level Were To Change by a 
Larger Amount Than One Basis Point

    Fourteen commenters offered comments on NCUA's current policy of 
notifying and requesting public comment in the event the NOL changes by 
more than one basis point. Nine of these commenters favored keeping 
this requirement in the policy, with most citing the potential impact 
on credit unions and transparency as the basis for their view. One 
commenter expressed that even one basis point reflects a large dollar 
amount and has a material impact on individual credit unions.
    The current policy to notify and request comment is necessary to 
provide transparency involving actions taken regarding the management 
of the Share Insurance Fund. Commenters believe it is sound public 
policy to provide stakeholders the opportunity to participate in 
considerations of even modest adjustments to the NOL and other 
adjustments that impact the Share Insurance Fund (referring to the 
Overhead Transfer Rate). One commenter supported continuation of the 
notice and comment practice but suggested a range of three to five 
basis points would provide the Board sufficient latitude to adjust the 
NOL without a full comment period.
    Two commenters stated public comment is warranted any time the NOL 
calculation results in an NOL above 1.3 percent. Individual commenters 
expressed the following:
     NCUA eliminating the comment requirement for a one basis 
point change is concerning because it may trigger NCUA to make a series 
of one basis point increases without the opportunity for public 
comment.
     Public comment is only necessary if the change prompts a 
required premium for all credit unions.
     Public comment should be required for all NOL changes, 
regardless of amount.
    Many of the commenters stressed the importance for the Board to 
consider setting the NOL at a level that achieves a balance between a 
stable Share Insurance Fund equity position and minimizing financial 
strain on credit unions. Commenters noted that preserving as much 
members' equity as possible supports a credit union's mission of 
providing products and services to their members. Commenters also noted 
the majority of credit unions are well capitalized and pose little risk 
to the Share Insurance Fund. Credit unions with higher risk to the 
Share

[[Page 72282]]

Insurance Fund are properly identified and working toward resolution, 
as evidenced by the low number of failures that pose a cost to the 
Share Insurance Fund.
    Many commenters expressed the prolonged history and adequacy of a 
NOL of 1.3 percent, stating the Board is provided sufficient tools 
within the Act (premiums and distributions) to manage the Share 
Insurance Fund's equity within the statutory range of 1.2 percent and 
1.5 percent. Many of these commenters cited the more recent NOLs the 
Board set at 1.39 percent in 2017 and 1.38 percent in 2019 were based 
on the closure of the Temporary Corporate Credit Union Stabilization 
Fund (Stabilization Fund) and the consolidation of the Stabilization 
Funds' assets and liabilities into the Share Insurance Fund. In the 
commenters' view, these do not reflect an appropriate NOL going 
forward.
    Other commenters expressed concern over NCUA's budget. These 
commenters focused on the agency's need to manage expenses to reduce 
the Share Insurance Funds' obligation to fund a portion of NCUA's 
operating budget, thus maintaining higher levels of equity in the Share 
Insurance Fund and minimizing the credit union industry's obligation.
    The Board agrees public comment, although not required, could be 
helpful when considering a change to the NOL policy or methodology. The 
Board also wishes to clarify two points that may have confused some 
commenters. Several commenters stated public comment should be 
requested anytime the NOL results in a premium or potential premium. 
The NOL does not trigger a premium, but rather establishes the point 
above which a distribution is required. The actual equity ratio is 
measured against the NOL to determine if a distribution is required. 
The Board may only levy premiums when the Share Insurance Fund's actual 
equity ratio falls below 1.30 percent. Even if the actual equity ratio 
is below 1.30 percent, the Board weighs other factors, including 
financial projections, prior to determining whether to assess a 
premium.
    The Board believes the NOL must be set based on a quantitative and 
qualitative analysis, with the quantitative analysis being the primary 
driver in setting the NOL and the qualitative factors considered by the 
Board, as appropriate. The Board agrees with commenters that a request 
for public comment, although not required, is helpful if the NOL 
changes. The Board will continue seeking public comment when the NOL 
changes by more than one basis point.

Should the NOL be re-evaluated in the midst of an economic downturn or 
should it be left unchanged until the onset of an economic recovery?

    Ten commenters responded to the issue of whether the NCUA should 
reevaluate the NOL in an economic downturn or leave it unchanged until 
the onset of an economic recovery. Three commenters stated the NOL 
should be continuously evaluated and one stated the NOL should not be 
changed. The remaining commenters emphasized the need for the process 
to be standardized and for NCUA to strike a balance between 
safeguarding the Share Insurance Fund and avoiding overburdening credit 
unions and their members.
    The Board believes the current process is standardized and based on 
the risk inherent in the Share Insurance Fund. The recent economic 
downturn due to the COVID-19 pandemic resulted in unusual share growth 
and volatility in the financial markets. The Board will continue to 
apply a standardized approach to calculating the NOL while also using 
experience and judgment to determine if the NOL should remain unchanged 
under such circumstances.

Should the Normal Operating Level be re-evaluated on qualitative 
factors based on the COVID-19 pandemic?

    Ten commenters responded to the question regarding whether the NOL 
should be re-evaluated on qualitative factors based on the COVID-19 
pandemic. Seven commenters stated the NCUA should not re-evaluate the 
NOL based on abnormal events with a high level of uncertainty. Several 
commenters stated they were opposed to the inclusion of qualitative 
factors as it would reduce transparency. Three commenters stated some 
support for evaluating factors due to an economic downturn. One 
commenter stated the NOL should be evaluated holistically, accounting 
for both data and environmental factors. Another commenter expressed 
support for a policy that is based on historical record that all U.S. 
recessions would last only a few months, as has generally been the case 
since the Great Depression. Finally, one commenter reiterated that the 
NOL should always be re-evaluated based on qualitative factors, but the 
policy should be to look beyond the numbers and make decisions based on 
actual or perceived risk to the Share Insurance Fund and the credit 
union industry.
    The Board agrees the NOL policy should not be constructed to react 
to single events such as the current pandemic and the methodology 
should be quantitative and qualitative, with the quantitative analysis 
being the primary driver in setting the NOL and the qualitative factors 
considered by the Board, as appropriate. In terms of qualitative 
factors, the Board reserves the right to consider environmental factors 
in the decision to change the NOL or retain it at its current level 
given all available information. Unusual non-quantitative factors 
affecting the decision regarding the NOL may be disclosed if the impact 
is material.

Is there any other information that the Board should consider when 
setting the NOL?

    Fourteen commenters offered responses regarding additional 
information the Board should consider when setting the NOL. Nine 
commenters suggested the Board set the NOL at the pre-2017 level of 
1.30 percent. The rationales presented include:
     The risk from the merger of the Stabilization Fund no 
longer exists,
     The Board cannot assess a premium when the equity ratio is 
above 1.30 percent, and
     The NCUA should not hold more equity than legally 
required, except for identifiable losses.
    Commenters also voiced opposition to any statutory changes removing 
the 1.50 percent NOL ceiling or removing the restriction on premiums 
when the equity ratio is at or above 1.30 percent. Several commenters 
stated the NCUA should convert all Share Insurance Fund accounting to 
private generally accepted accounting principles (GAAP) to allow for 
earlier recognition of the one percent capitalization deposit 
adjustment. One commenter stated that, if the NCUA wanted to manage to 
a NOL higher than 1.30 percent, there would be a couple of options, 
including but not limited to cutting operating expenses, increasing 
investment yields, or using its borrowing authority. Finally, one 
commenter recommended the Board reconsider the current NOL policy 
objectives. The commenter stated the NOL does not prevent impairment of 
the contributed capital deposit and setting the NOL has very little to 
do with public confidence in federal share insurance and the equity 
ratio declining below 1.20 percent over a five-year period. What 
matters is identifying and preparing for risks that threaten the Share 
Insurance Fund's equity ratio.
    The Board does not agree with arbitrarily setting the NOL. The NOL 
represents the level of equity the Share Insurance Fund should have to 
meet the

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policy objectives based on a robust modeling of risk.
    While commenters provided feedback opposing any statutory changes 
removing the 1.50 percent ceiling on the equity ratio or the 1.30 
percent cap on the Board's ability to charge a premium, the Board has 
determined these comments are outside the scope of this request. These 
changes would be a matter for Congress to decide. However, the current 
statutory restrictions are a constraint on the Board's ability to 
pursue a counter-cyclical approach to managing the Share Insurance 
Fund.
    Regarding changing the accounting methodology for the Share 
Insurance Fund, the NCUA offers the following response. GAAP treatment 
does not directly tie to the NOL policy and is considered beyond the 
scope of this request. This can be considered separately as 
appropriate.
    With respect to the audit, the NCUA's Office of Inspector General 
engages an independent auditor to express an opinion on the NCUA's 
financial statements based on their audit and in accordance with 
auditing standards. The 2020 audit opinion indicated the Share 
Insurance Fund's financial statements present fairly, in all material 
respects, the financial position of the Share Insurance Fund in 
accordance with U.S. GAAP. Share Insurance Fund footnote disclosure 
numbers eight and fourteen include detailed financial information about 
the NGN program and the Asset Management Estate Fiduciary Revenues, 
Expenses, Assets and Liabilities. These footnote disclosures and the 
amounts contained within them are fully audited as part of the Share 
Insurance Fund's financial statement audit.
    With regard to the comments stating that if the NCUA wanted to 
manage to an NOL higher than 1.30 percent there would be a couple of 
options, including cutting operating expenses, increasing investment 
yields, or using its borrowing authority, the Board notes that it 
controls operating expenses to the extent possible consistent with 
having sufficient resources to achieve the agency's mission. The Board 
has limited options to increase investment yields, as those are 
determined by the market and the Share Insurance Fund is limited by law 
to investing in ``any interest-bearing securities of the United States 
or in any securities guaranteed as to both principal and interest by 
the United States or in bonds or other obligations which are lawful 
investments for fiduciary, trust, and public funds of the United 
States.'' \9\ Finally, borrowing funds on behalf of the Share Insurance 
Fund would be a liability and would not increase the equity ratio.
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    \9\ 12 U.S.C. 1783(c).
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    Regarding the commenter who offered specific comments on the NOL 
policy objectives, the Board offers the following responses: The Board 
believes having a robust methodology to determine what level of equity 
the Share Insurance Fund would need to prevent impairment of the one 
percent capitalization deposit, and to prevent it from falling below 
1.20 percent over five years in a moderate recession, bolsters public 
confidence. The Board agrees that it is important to identify and 
prepare for risks that threaten the Share Insurance Fund. The NOL 
policy is designed to determine the risk to Share Insurance Fund under 
a stressed environment, which is when losses generally occur.

Final Action

    The Board will retain the current objectives for setting the NOL. 
When setting the NOL, the Board will seek to satisfy the following 
objectives:
     Retain public confidence in federal share insurance;
     Prevent impairment of the one percent contributed capital 
deposit; and
     Maintain the Share Insurance Fund through a moderate 
recession without the equity ratio declining below 1.20 percent over a 
five-year period.
    The impact of changes in value of the corporate asset management 
estates and the decline in the equity ratio through the end of the 
following year without an economic downturn will be removed from the 
NOL calculation. The Board will continue to use a decline in the Share 
Insurance Fund's equity in a moderate recession to estimate the 
additional equity needed to prevent the equity ratio from falling below 
1.20 percent. Any change to the normal operating level of more than 1 
basis point shall be made only after a public announcement of the 
proposed adjustment and opportunity for comment. In soliciting comment, 
the NCUA will issue a public report, including data supporting the 
proposal.

    By the National Credit Union Administration Board on December 
16, 2021.
Melane Conyers-Ausbrooks,
Secretary of the Board.
[FR Doc. 2021-27639 Filed 12-20-21; 8:45 am]
BILLING CODE 7535-01-P