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Matz Details Potential Supplemental Capital Changes
Wednesday, April 22, 2015 6:30 AM

National Credit Union Administration Chair Debbie Matz went into some specifics on how the agency could allow for supplemental capital in this month's edition of The NCUA Report. Matz uses her column this month to elaborate on the five areas of what she previously referred to as "the year of regulatory relief."

Matz said there is a clear need for supplemental capital in certain circumstances, and she is committed to allowing it to be counted in full. "For example, NCUA could count certain forms of subordinated debt as supplemental capital for the risk-based capital ratio," Matz wrote. "It could be issued to members and non-members, but it would be uninsured."

Matz added that for this to happen, the NCUA would need to:

  • Provide consumer protections;
  • Change the order of Share Insurance Fund payout priorities to recognize that supplemental capital accounts are not insured; and
  • Set prudent standards, such as minimum redemption periods, to ensure supplemental capital is available to cover losses during times of stress.

Matz said effective dates of these changes could coincide with the proposed implementation of the agency's risk-based capital proposal in 2019.