More questions than answers continue to shake the industry since the NCUA proposed a rule that would set higher capital requirements for credit unions with more concentrations in member business loans and other assets.
"The message that NCUA is sending, intentionally or not, is that CUSOs are risky and you need to reserve a hefty amount of capital if you dare to invest in them," said Guy Messick, general counsel for the National Association of Credit Union Service Organizations. "NCUA is even proposing to risk weight the profits of CUSOs. In other words, if your CUSO makes money and the equity value increases, you must reserve for the profits made as well as the original investment."
In January, the NCUA proposed a risk-based capital rule that says in order for a credit union to be classified as well-capitalized, it must maintain a risk-based capital ratio of 10.5% or above, and pass both net worth ratio and risk-based capital ratio requirements. Adequately capitalized credit unions would have to maintain risk-based capital ratios between 8% and 10.49% and pass ratio requirements. The threshold for undercapitalized credit unions would fall below 8%.
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