WASHINGTON - The National Association of Federal Credit Unions (NAFCU) endorsed The Capital Access for Small Businesses and Jobs Act, introduced today by Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.), which addresses the critical issue of supplemental capital for credit unions.
“NAFCU thanks Reps. King and Sherman for their continued leadership on this issue and for introducing this critical bi-partisan legislation,” said Fred Becker, Jr., NAFCU president and CEO. “Capital Reform is one of the five key points in NAFCU’s credit union regulatory relief plan, with access to supplemental capital a priority. We are pleased that the legislation preserves the not-for-profit structure of credit unions and ensures that ownership remains with the credit union’s members.”
King and Sherman introduced similar legislation last Congress as H.R. 3993, The Capital Access for Small Businesses and Jobs Act.
The new legislation proposes that non-share capital accounts:
- do not alter the cooperative nature of the credit union;
- are uninsured;
- are subordinate to all other claims against the credit union, including the claims of creditors, shareholders, and the National Credit Union Share Insurance Fund (NCUSIF);
- are available to be applied to cover operating losses of the credit union in excess of its retained earnings and, to the extent so applied, will not be replenished;
- are subject to maturity limits as determined by the credit union board; and
- are offered by a credit union that is determined by the board to be sufficiently capitalized and well-managed.
The bill incorporates language agreed upon by NAFCU and the Credit Union National Association during a meeting at NAFCU’s 2010 Congressional Caucus. Following that meeting, the associations wrote to NCUA Chairman Debbie Matz requesting her assistance in moving the proposal forward because of the “ever-increasing importance” of supplemental capital. Both NCUA and the National Association of State Credit Union Supervisors (NASCUS) support access to supplemental capital for credit unions.
“This legislation will go a long way to help well-managed credit unions administer their net worth levels more effectively,” said Becker. “We urge Congress to move forward quickly to enact this legislation.”
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The National Association of Federal Credit Unions is the only national organization that focuses exclusively on federal issues affecting credit unions, representing its members before the federal government and the public.