NCUA Shouldn't Follow FDIC's Lead On Higher Capital Requirements

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In response to Credit Union Journal's May 9th article regarding capital levels; Mike Moebs may be correct when he suggests that NCUA, in knee-jerk reaction (my words) to the FDIC's increased capital requirements, will also raise minimum capital levels at credit unions by 3%. However, one can hope that the NCUA will recognize that banks are simply being required to look more like credit unions when determining appropriate levels of real capital for their industry.

Because, as it turned out, credit unions had more than enough capital to withstand the worst economic downturn since the Great Depression and remain well capitalized by almost anyone's standard. To require higher capital levels would be overkill and cause us to become even more inefficient.

Merging the NCUSIF into the FDIC would also be a stretch if rational thinking exists (dare I suggest a thing) in Washington D.C. The NCUSIF fund is strong, containing about 1.29% of insured deposits while the FDIC insurance fund is operating at or below $0.00. The NCUA may have missed the over concentration in subprime MBS investments at some corporate and natural credit unions but so did the FDIC, Office of Thrift Supervision and the Federal Reserve. In fact, as regulators, they really blew it because they allowed the creation of the conditions and the investments that nearly destroyed the world's financial system. None in the regulatory world covered themselves with glory during the past several years but in my opinion to reward the ones who caused or allowed the meltdown to happen would be a travesty of monumental proportion.

R. Marshall Boutwell, President/CEO
Gwinnett FCU, Lawrenceville, Ga.

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