Although it is titled a “summary,” NASCUS has developed a comprehensive look at the “alternative capital” proposal issued by the NCUA Board at its January meeting; this rule is out for comment to May 9 (a 90-day period).
The 3,400-word NASCUS summary looks at the 50-page proposal through the lens a dozen key issues outlined in the proposal, including: Current use of alternative capital, secondary capital, supplemental capital, taxation, mutual ownership, applicability of securities law, prudential standards for issuing and counting alternative capital for PCA and counting alternative capital for regulatory net worth.
Additionally, the summary notes that the proposal includes six questions from the 2015 rulemaking regarding risk-based capital. “Noting that it received few responses to the questions, NCUA has again asked those six questions,” the summary points out.
The summary also points out that limitations on supplemental imposed on federal credit unions do not apply to state credit unions. “State credit unions may issue whatever forms of supplemental capital might be authorized under state law so long as those offerings are not explicitly prohibited by NCUA through share insurance regulation,” the summary states. “Current rules limit FISCU borrowing to 50% of paid-in and unimpaired capital with the ability to seek a waiver up to any higher limit imposed by the state.”
NASCUS has urged participants throughout the state system to weigh in on the proposal. “There is much to be considered in the 50-page proposal, particularly the challenges it outlines,” NASCUS President and CEO Lucy Ito said last month when the proposal was issued.” The state system, however, believes that these challenges can be overcome — and that credit unions will ultimately have access to the tools they need to maintain safe capital levels during good and bad economic times.”