NCUA Eases Secondary Capital Supervisory Policies

Low-income credit unions and investors will find secondary capital processes easier under revisions to the National Credit Union Administration’s supervisory policies. The revised procedures can be found in the updated section of the agency’s National Supervision Policy Manual, available online here.

“Under my Regulatory Modernization Initiative, NCUA seeks to lift compliance burdens from credit unions where it’s prudent and consistent with safety and soundness,” Board Chairman Debbie Matz said. “Sometimes, that’s accomplished through regulation; other times, through supervisory changes. The supervisory changes related to supplemental capital make it easier for low-income credit unions to obtain, and give investors greater clarity and confidence. We’ve also added more flexibility and transparency.”

Matz said the changes to the agency’s National Supervision Policy Manual were aimed at achieving two goals: expediting the approval of secondary capital requests by regional offices and making it possible for credit unions that have secondary capital to return portions of the loans that no longer count towards net worth.

“The streamlined approval process for secondary capital plans for CAMEL 1 and 2 credit unions is a significant improvement,” said John Trull, the NWCUA’s assistant vice president for regulatory advocacy. “Furthermore the improved redemption process is better for both investors and credit unions. This is the first step in the larger process of making secondary capital more accessible. The NCUA should be commended for taking these steps.”

Secondary capital helps low-income credit unions expand services and maintain capital levels by supplementing net worth.

In December, Matz announced that William Myers, Director of NCUA’s Office of Small Credit Union Initiatives, would chair a secondary and supplemental capital working group that will, among other things, consider ideas for raising the value of secondary capital for low-income credit unions. Representatives from credit unions and secondary capital investors are being consulted as the working group identifies investment models that are likely to be successful in the marketplace.

The working group will publish a secondary capital web page later this month. Interested parties may email comments to the group at SCWG@ncua.gov.

Questions about this story? Contact James Pearson: 206.340.4790, jpearson@nwcua.org.

Posted in Advocacy News, NCUA.