It would appear that hey’ve effectively been asked to lower their lending standards, correct? And are doing so via creative accounting methods involving transfers of hidden accounts, of which I will not be aware.
Don’t like it at all. Not sure what to do about it at this point, though.
There’s nothing here to suggest that they’ve “lowered their lending standards”. Nothing. They need to use their capital efficiently in order to operate with optimal financial efficiency, which benefits YOU. Having extra capital unnecessarily tied up in regulatory red tape is not a good thing. If they start actually relaxing their criteria for making loans, then you should be concerned, but that’s not what’s being described here.
It’s like if you’ve got a an interest bearing savings account and also a non-interest bearing checking account that has no fees if you maintain a minimum balance. And then you realize you’ve been keeping more in the checking account than you need to in order to avoid the fees, because you hadn’t realized that the calculation was on the average balance over the whole month, and thought it had to stay above the minimum at all times to avoid the fee. If you fix this by moving the excess to your savings account where it will start earning interest for you, you’ve done a *good* thing. This is basically what your credit union is doing here — maybe because they’ve been late to realize something, or maybe because there’s been a change or clarification of the regulatory rules, but either way, it would be irresponsible of them not to maximize how their regulatory reserves are calculated.