The CEO of a $1 billion credit union told Credit Union Times the NCUA's proposed risk-based capital rule would hurt his credit union's business model, shifting it from well capitalized to undercapitalized.
"The capital requirements for credit unions with concentration in member business loans is way too high at 14% – higher than what's required for commercial banks," said Mark Holbrook of the $1 billion Evangelical Christian Credit Union in Brea, Calif., noting that unlike banks, credit unions have no means of raising alternative capital.
"So the effect that has on our credit union is we go from well capitalized, which we've been at for years, to now undercapitalized overnight, so of course we feel that it's an outrageous level of capital to be requiring of credit unions that have these concentrations," Holbrook said.
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