Critics assail RBC regulator, rule

by. Michael Muckian

Regulatory directives often elicit strong responses from those they influence, but few rules have caused the level of feedback and outrage generated by the NCUA’s proposed risk-based capital rule as the May 28 comment deadline approaches.

Described variously as punitive and a tax on cooperatives in terms of the risk weightings it applies to credit unions’ long-term assets, critics say the rule as currently outlined could cripple credit unions’ competitive advantage. At the very least, the demand for significantly increased capital reserves for critical areas like CUSOs, mortgages and member business loans will restrict some credit unions’ growth and service to members.

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