|Run that by me again!|
Under current Law: The Federal Credit Union Act (FCUA) specifically states a definition of "net worth" and the levels of net worth a credit union must maintain to be considered "well capitalized", "adequately capitalized", etc. Additionally, the FCUA suggests an additional level of reserve requirements "if" a credit union is "complex". The additional level of reserves is called "risk-based net worth"(RBNW).
Under the current law, "if" a credit union has a RBNW ratio of greater than 6% "and" the credit union's RBNW ratio is also greater than it's net worth ratio, "then" additional reserves may be required. So, if a credit union is not "complex", then risk-based standards do not apply under current law. Effectively the credit union system already has a "risk-based" system for determining "riskier credit unions" and has had that system since 2000.
One would assume that the largest credit
Here's a look at the RBNW ratios of the largest credit unions. Don't let the truth shock you…
You'll note in the middle column that only seven of the top 25 credit unions are above the 6% RBNW threshold and most just slightly - only one is above 7%. So, only 7 of the top 25 credit unions are "complex" under existing law, and subject to additional risk review. You'll note that no large credit union's RBNW ratio is even close to be being above it's net worth ratio!
ALL LARGE CUs UNDER CURRENT LAW ARE "NOT RISKY"!!
(… despite the Chair's hopes!)
… without unilaterally declaring all CUs above $50 million to be "complex", NCUA doesn't have much of a case for imposing its new RBC on the credit union movement. Commented yet?
Don't wait for "never"...