In February the NCUA published proposed new risk-based capital rules for the credit union movement, which include a 250% risk weighting on investments in CUSOs.
The industry has until May 29 to provide comment letters on the proposed regulations to the NCUA board secretary. CO-OP Financial Services took the opportunity to do so because we believe the 250% weighting will stifle risk sharing and collaboration, the very reason CUSOs exist.
The CUSO risk metric is not justified when the true nature of CUSO investment is considered. And, the figure is strikingly arbitrary for a several reasons, including the fact that there is no differentiation based on the business purpose of the CUSO, the ownership structure of the CUSO – single or multiple owners – or the corporate structure of the CUSO.
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