Bill Would Allow CUs ‘Appropriate Ability’ to Raise Supplemental Capital

WASHINGTON – CUNA President/CEO Jim Nussle wrote Tuesday in support of a bill that would allow credit unions to accept supplemental capital. The Capital Access for Small Businesses and Jobs Act (H.R. 1244) was introduced by Reps. Steve King (R-Iowa) and Brad Sherman (D-Calif.).

“We believe your legislation would provide credit unions with the appropriate ability to raise capital from sources other than retained earnings without putting in jeopardy the ‘one member, one vote’ principle that is the bedrock of the credit union ownership structure,” Nussle wrote. “This legislation would improve a credit union's ability to maintain safety and soundness by allowing them to develop a supplemental cushion which ultimately reduces risk to the National Credit Union Share Insurance Fund.”

Specifically, H.R. 1244 would:

  • Allow credit unions to accept other forms of capital, provided it does not alter the cooperative ownership structure of credit unions;
  • Requires this capital to uninsured and subordinate to other claims against the credit union; and
  • Authorizes the NCUA to set maturity limits on this capital and restrict the ability to raise supplemental capital to credit unions which are sufficiently capitalized and well managed.

CUNA long has supported providing credit unions access to supplemental capital, particularly as a measure to aid credit unions as they contend with the NCUA’s risk-based capital rule.

The NCUA recently put forth an Advance Notice of Proposed Rulemaking (ANPR) regarding the use of alternate capital. Comments will be accepted through May 9, and CUNA urges credit union stakeholders to provide feedback.

For a closer look at both H.R. 1244 and the NCUA’s ANPR, and how they fit into CUNA’s advocacy strategy, see CUNA’s Removing Barriers Blog.

in Legislative & Political News