WASHINGTON (7/18/13)--The Credit Union National Association will participate today in a briefing for Capitol Hill staffers on issues surrounding the need for credit unions to have access to supplemental forms of capital.
CUNA President/CEO Bill Cheney will describe the need for new laws to support well-capitalized credit unions and their members.
Under current law, a credit union's net worth ratio is determined solely on the basis of retained earnings as a percentage of total assets.
As a consequence, a credit union that is successful in serving its members and attracting new shares runs the risk of diluting its regulatory capital ratio, triggering non-discretionary capital-based supervisory actions under prompt corrective action (PCA) rules. Healthy credit unions may be forced to turn away deposits and to restrict lending to satisfy rigid regulatory capital requirements.
CUNA supports pending legislation that would allow well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings.
The bill also has National Credit Union Administration support. NCUA Chair Debbie Matz pledged in a May 2 letter to the bill's chief sponsors, Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.), that if the U.S. Congress enacts their "Capital Access for Small Business and Jobs Act" (H.R. 719), her agency will "promptly propose the necessary rule changes required for implementation."