Wrangling with risk-based capital

first_img 3SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr It’s time for a more rational approach to managing risk.by: James CollinsLast Thanksgiving—for the first time ever—my wife attempted to make a Tofurky. The commentary from the kitchen was, as we say, rather illuminating:“Wait, which one is the tofu? Wait, that’s the gravy?”“Why is the cat circling my feet and why do I smell canned cat food?”“No microwave instructions????”“Would it be bad if I added chicken stock to it?” (Answer is no, chicken stock is like donated plasma from chickens).Tofurky is just like other misnamed foods such as “Spaghetti squash” (which is as far from spaghetti as Lindsey Lohan is from being an actress) and Kale (which looks, feels, and reminds you of lettuce but tastes like something your mother would mend denim jeans with).And that brings us to something else that isn’t what it seems: NCUA’s Risk Based Capital proposal.Since the first attempt to establish the rule had a “little bit of pushback,” per NCUA—which is a bit like saying “the defensive front line of the Arizona Cardinals strongly recommends that the opposing running back not advance”—the plan is to try again.On its surface, NCUA has a daunting task. It must encapsulate all of the following risks into a simple, easy-to-understand ratio: continue reading »last_img

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