Regulatory directives often elicit strong responses from those they influence, but few rules have caused the level of feedback and outrage generated by the NCUA's proposed risk-based capital rule as the May 28 comment deadline approaches.

Described variously as punitive and a tax on cooperatives in terms of the risk weightings it applies to credit unions' long-term assets, critics say the rule as currently outlined could cripple credit unions' competitive advantage. At the very least, the demand for significantly increased capital reserves for critical areas like CUSOs, mortgages and member business loans will restrict some credit unions' growth and service to members.

"This is the case of the regulator in reactive mode," said Mark Starr, president/CEO of the $559 million Florida Credit Union in Gainesville, Fla. "The proposed rule will limit the mix of our balance sheet over the next five to 10 years, making us less competitive in the marketplace and reducing our ability to serve members."