Alternative Capital

The NCUA Board (Board) issued an advanced notice of proposed rulemaking (ANPR) to solicit comments on alternative forms of capital federally insured credit unions could use in meeting capital standards required by statute and regulation. For purposes of the ANPR, alternative capital includes two different categories:

  1. Secondary capital; and
  2. Supplemental capital. 

Secondary capital is currently permissible under the Federal Credit Union Act (Act) only for low-income designated credit unions to issue and to be counted toward both the net worth ratio and the risk-based net worth requirement of NCUA's prompt corrective action standards. The Board is considering changes to the secondary capital regulation for low-income designated credit unions. There are no other forms of alternative capital currently authorized. However, the Board is also considering whether or not to authorize credit unions to issue supplemental capital instruments that would only count towards the riskbased net worth requirement.

While the ANPR contains numerous detailed questions, the Board is seeking comments on the following broad categories summarized in the following questions:

    1. Should additional supplemental forms of capital be included in the RBC numerator and how would including such capital protect the Share Insurance Fund from losses?
    2. If yes, to be included in the RBC numerator, what specific criteria should such additional forms of capital reasonably be required to meet to be consistent with GAAP and the Act, and why?
    3. If certain forms of certificates of indebtedness were included in the risk based capital ratio numerator, what specific criteria should such certificates reasonably be required to meet to be consistent with GAAP and the Act, and why?
    4. In addition to amending NCUA's RBC regulations, what additional changes to NCUA's regulations would be required to count additional supplemental forms of capital in NCUA's RBC ratio numerator?
    5. For state-chartered credit unions, what specific examples of supplemental capital currently allowed under state law do commenters believe should be included in the RBC ratio numerator, and shy should they be included?
    6. What investor suitability, consumer protection, and disclosure requirements should be put in place related to additional forms of supplemental capital?

  Comments will be due on or before May 9, 2017

Comment to CUNA Staff Provide feedback here
Agency/Entity National Credit Union Administration
Agency Comment Deadline 05/09/2017
CUNA Contact

Andy Price