Credit unions face a newfuture with capital reform, but experts say another issue –supplemental capital – may have a major influence on whether theindustry can compete under new risk-based capital rules.

Most credit unions can only raise capital through retainedearnings; banks, on the other hand, aren't subject to thatlimitation. In turn, banks typically have more venues through whichto fund operations or acquisitions. For years, legislators haveattempted to even things out by introducing bills that would liftthe restriction for credit unions.

At the same time, the NCUA's new risk-based capital rules, or“RBC2,” have been percolating. RBC2 establishes, among otherthings, new risk-based capital ratios and new risk weights forcredit unions. The NCUA board approved the rules on Oct. 15.

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