WASHINGTON-Congressman Brad Sherman (D-Calif.) said that if he had his druthers a bill covering secondary capital for credit unions would be introduced immediately, but in the real world, he feels the best strategy is to wait for the General Accounting Office’s report on the issue. He added that he hoped the GAO’s study could be completed around May of this year, but emphasized that content was more important than speed. “We’ve got key people on the committee asking for that study and anxious to see the results of that study,” the congressman said. House Financial Services Committee Chairman Mike Oxley (R-Ohio) and Ranking Member Barney Frank (D-Mass.) co-signed the original letter requesting GAO to look into it. Sherman stressed that he is a strong advocate for secondary capital because it provides protection for the insurance fund, serves as a buffer for the individual credit unions, and protects other credit unions from potentially having to pay higher premiums. Sherman explained that his staff has had informal discussions with the GAO team assigned to the study and he is pleased with the outline of the study included in their formal response to his office in a Nov. 25, 2003 letter. GAO Director of Financial Markets and Community Investment Rick Hillman wrote that GAO would look into NCUA’s response to similar questions from the lawmakers. GAO will also delve into the pros and cons of credit union access to secondary capital and identify alternatives. Sherman said he is pleased with the resources GAO has dedicated to this assignment. The congressman has introduced amendments regarding secondary capital previously to other legislation. This year, he announced plans to introduce a stand-alone bill allowing credit unions to include secondary capital in their net worth ratios.

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