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Cornerstone, CUNA Urge CU Feedback on NCUA’s Alternative Capital ANPR
Tuesday, January 24, 2017 6:50 AM

Cornerstone Credit Union League and Credit Union National Association plan to work across the credit union industry to ensure the National Credit Union Administration receives feedback on its alternative capital Advance Notice of Proposed Rulemaking (ANPR) put forth Thursday. The ANPR seeks information on a broad range of alternative capital topics.

“For quite some time, credit unions have urged NCUA to consider allowing credit unions access to additional forms of capital to better compete in the market," said Suzanne Yashewski, Cornerstone SVP regulatory compliance. "Now that NCUA has turned its focus on this important issue, we need credit unions to provide specific suggestions. Please send comments to syashewski@cornerstoneleague.coop so that we may incorporate member credit union’s suggestions into the League’s comment letter.”

Some questions to consider include:

  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 Generally Accepted Accounting Practices (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 why 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?


According to the NCUA, alternative capital includes two separate categories: secondary capital and supplemental capital.

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 this. 

There are no other forms of alternative capital currently authorized.

The board is also considering whether or not to authorize credit unions to issue supplemental capital instruments that would only count towards the risk-based net worth requirement.

Topics addressed in the ANPR include:

  • Prudential standards regarding the extent to which various forms of instruments would qualify as capital for prompt corrective action purposes and credit union eligibility for the sale of alternative capital;
  • The utility and suitability of supplemental capital for credit unions;
  • Standards for investor protection, including disclosure requirements and investor eligibility criteria for the purchase of alternative capital; 
  • Implications of securities law for supplemental and secondary capital; 
  • Potential implications for credit unions, including the credit union tax status; and
  • Overall regulatory changes the board would need to make to permit supplemental capital, improve secondary capital standards, and provide or modify related supporting authorities.


The ANPR poses a number of specific questions on these and other topics, but invites comments on any and all aspects of alternative capital, according to the NCUA. Comments are due to the NCUA within 90 days of the ANPR’s publication in the Federal Register.