The National Credit Union Administration Board announced last week that it will solicit comments from stakeholders on alternative forms of capital federally insured credit unions might use to meet required capital standards.
NCUA identifies two categories of alternative capital: secondary capital and supplemental capital. Secondary capital counts toward both the net worth ratio and the risk-based net worth requirement.
The NCUA Board is discussing the idea of making changes to the existing secondary capital regulation. It is contemplating whether to authorize federally insured credit unions to issue supplemental capital instruments that would only count toward a credit union’s risk-based net worth requirement.
Board Chairman Rick Metsger urged credit unions to study this idea and provide the agency with feedback.
“I strongly encourage credit unions to study this notice very carefully and make themselves familiar with the questions NCUA’s Board faces,” Metsger said.
“There are significant implications of alternative capital for the credit union system, and this subject is just as important for credit unions who aren’t planning to issue alternative capital as it is for those who are. Agencies issue these advance notices when they are considering a wide range of options and are looking for comment on the best course to follow. To improve any future rulemaking, we need your thoughts on the pros and cons before we move forward to a full proposal.”
Comments must be received within 90 days of publication in the Federal Register.
At its board meeting last week, the NCUA amended its regulations to adjust the maximum amount of civil monetary penalties under its jurisdiction to account for inflation.