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Comments on Alternative Capital Due to NCUA May 9
Thursday, February 9, 2017 6:50 AM

The National Credit Union Administration published its Advance Notice of Proposed Rulemaking (ANPR) on alternative capital in the Federal Register Wednesday, with comments due to the agency by May 9. NCUA approved the ANPR at its January meeting.

NCUA considers alternate capital to fall in 2 categories: secondary and supplemental. Secondary capital is currently permissible 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.

The board is considering changes to the secondary capital regulation for low-income designated credit unions, as well as considering whether or not to authorize credit unions to issue supplemental capital instruments that would only count toward the risk-based net worth requirement.

Besides a number of detailed questions present in the ANPR, the board seeks answers to the following:

  • Should additional supplemental forms of capital be included in the risk-based capital (RBC) numerator, and how would including such capital protect the Share Insurance Fund from losses?
     
  • 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 Federal Credit Union Act, and why?
     
  • 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 Federal Credit Union Act, and why?
     
  • 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?
     
  • 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?
     
  • What investor suitability, consumer protection, and disclosure requirements should be put in place related to additional forms of supplemental capital?

Comments can also be sent to CUNA by May 9.