Supplemental Capital Input Needed for NCUA Draft Rule

Northwest credit unions have an opportunity to share their collective voice for a chance to influence another upcoming NCUA draft rule on secondary capital, according to an announcement today from the federal regulator.

“There are significant implications of alternative capital for the credit union system, and this subject is just as important for credit unions who aren’t planning to issue alternative capital as it is for those who are,” added Rick Metsger, NCUA Board Chair. “Agencies issue these advance notices when they are considering a wide range of options and are looking for comment on the best course to follow. To improve any future rulemaking, we need your thoughts on the pros and cons before we move forward to a full proposal.”

“This is a substantial opportunity for Northwest credit unions to act as key stakeholders in the development of a rule that  touches on a broad range of issues related to alternative capital,” added John Trull, AVP of Regulatory Advocacy for NWCUA.  “Association staff will be putting together a comment letter and bullet points and a Call to Action to ensure that the Northwest perspective is heard.”

The notice seeks comment on a broad range of topics, including:

  • Associated regulatory changes that would be necessary;
  • Potential tax implications related to issuing alternative capital, particularly for state-chartered credit unions;
  • Potential director and management liability issues from issuing alternative capital;
  • Investor protection issues and whether the sale of secondary capital, like supplemental capital, should be restricted to knowledgeable institutional investors;
  • The impact of alternative capital on the mutual ownership structure of credit unions; and
  • The application of securities law to both supplemental and secondary capital.

Click here for the full announcement from NCUA, including how to submit comments. For assistance with comment submissions, or any additional questions, contact John Trull directly at jtrull@nwcua.org.

Questions about this story? Contact Eric Horvath: 503.350.2222, ehorvath@nwcua.org.

Posted in Advocacy News, Federal, NCUA.