U.S. Rep. Suzan DelBene Agrees to Co-Sponsor Supplemental Capital Bill
April 25, 2014
April 25, 2014
U.S. Rep. Suzan DelBene has added her name to the Capital Access for Small Businesses and Jobs Act, saying supplemental capital would “allow financially healthy credit unions to continue meeting the needs of their customers and strengthening our economy.”
“With their focus on serving local communities, credit unions play an integral role in our economy,” says DelBene, who represents Washington’s 1st Congressional District. “They help working families purchase their dream homes and small businesses expand and create jobs. The Capital Access for Small Businesses and Jobs Act is a common-sense fix.”
The so-called supplemental capital bill, HR 719, was introduced by Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.) and referred to the House Committee on Financial Services in February. It currently has nearly 50 co-sponsors, including Oregon Democrats Earl Blumenauer and Suzanne Bonamici and Washington Democrat Denny Heck.
“Northwest credit unions are fortunate to have members of Congress who understand the unique structure of credit unions and the unique needs that come along with it,” says Jennifer Wagner, NWCUA’s senior vice president for advocacy. “We thank Congresswoman DelBene for her support on this issue, and for all of her efforts in the House to represent the people of Washington and the Pacific Northwest.”
Access to supplemental capital has taken on added significance in recent months with the unveiling by the National Credit Union Administration of its Risk-Based Capital proposal.
Under current law, credit unions must maintain a net worth ratio—retained earnings as a percentage of total assets—of at least 7 percent to be considered “well capitalized.” But the NCUA’s proposal would require credit unions with assets of more than $50 million to maintain a risk-based capital ratio of 10.5 percent to earn the same classification.
If implemented as written, the Credit Union National Association says, the NCUA proposal would require credit unions to hold as much as $7.3 billion in additional capital. Without access to supplemental capital, credit unions say, their only alternative will be to turn away share deposits, lower dividends, increase loan rates or ration services in an effort to slow growth.
HR 719 would allow credit unions to supplement their retained earnings with other forms of capital that wouldn’t be insured by the NCUA’s Share Insurance Fund and would be subordinated to other claims. Under the measure, credit unions could accept non-share capital accounts and could use the money to cover operating losses in excess of their retained earnings. The accounts would be subject to maturity limits set by a credit union’s board.
The measure would give the NCUA the power to determine whether a credit union is “sufficiently capitalized and well-managed” to be eligible to accept the capital. In 2011, NCUA board Chair Debbie Matz wrote lawmakers that allowing credit unions to accept supplemental capital would let “well-managed credit unions better manage net worth levels under varying economic conditions.”
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