The medical profession's oath to "first, do no harm" would be an apt principle for the financial industry's prudential regulators, including the NCUA, to follow. Unfortunately, the NCUA has released a proposed risk-based capital rule that would go quite the other way. It may just kill the patient.
Every credit union's field of membership, market, products, services and business plan are different. This proposal will, quite simply, put healthy credit unions out of business.
Under the framework of the proposed rule, some credit unions could be required to shoulder a disproportionate amount of the burden. In recent analysis, NAFCU determined that credit unions with more than $50 million in assets will have to hold a whopping $6.3 billion more in additional reserves to achieve the same capital cushion as before.
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