Credit unions could accept supplemental capital that wouldn’t be insured by the NCUSIF and would be subordinated to other claims, according to provisions of a bill introduced Thursday by Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.).
Under the measure, credit unions could accept non-share capital accounts and could use the money to cover operating losses in excess of its retained earnings. The accounts would be subject to maturity limits set by a credit union’s board.
The accounts would be subordinate to all other claims against the credit union, including the claims of creditors, shareholders and the NCUSIF.
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.
Last year, NCUA Chairman Debbie Matz wrote lawmakers that allowing non low-income credit unions to accept supplemental capital would let “well-managed credit unions better manage net worth levels under varying economic conditions.''
The agency hasn’t taken a position on the bill introduced Thursday.
CUNA President/CEO Bill Cheney said the measure “is all about ensuring that consumers and their communities will continue to receive support from their credit unions as they grow.’’
NAFCU President/CEO Fred Becker said his association is pleased that the measure “preserves the not-for-profit, mutual, member-owned and cooperative structure of credit unions and ensures that ownership remains with the credit union’s members.’’