CHICAGO – NASCUS has completed work on an alternative capitol white paper – "Alternative Capital for Credit Unions – Why Not?" and is planning to send it to members of the House Financial Services Committee and the Senate Banking and Urban Affairs Committee "in September or early October", according to NASCUS EVP, Government Relations Sandra Troutman. In introducing U.S. Central General Counsel Francois Henriquez who discussed the white paper during an educational session at the NASCUS Annual Conference and who worked with NASCUS in writing the white paper, Troutman explained that work on the white paper began after the GAO issued its study in the Fall 2004 that found there was no need for credit unions to have alternative capital. But state regulators disagreed and felt there was a need for state-chartered credit unions to be able to raise alternative capital, she said, and that provided the impetus for the development of the white paper. "The white paper is designed to present models to put the subject of alternative capital for credit unions in the public domain to be discussed with the goal of first amending the federal credit union act to allow for alternative capital and ultimately to amend the PCA requirements for credit unions," said Troutman. The white paper presents three alternative capital instrument models for credit unions to consider – subordinated debt; and two equity capital instruments – one that raises funds from members only, and another for non-member paid-in capital. According to the white paper, "each of the alternative capital instruments and arrangements discussed in this paper were designed specifically to preserve the not-for-profit, mutual, member-owned and cooperative structure of credit unions. Moreover, these instruments ensure that ownership interest (including influence) remains with the members. As such, neither of these instruments would affect the federal income tax exemption that credit unions have historically enjoyed." Henriquez also addressed the issue that credit unions' inability to raise alternative capital has been one of the frequently cited reasons by credit unions that have converted to non-credit union charters for their decision. "These credit unions are saying if they were banks and needed capital, they could raise alternative capital. So if credit unions were allowed to raise supplemental capital, that would take that argument off the table," he told attendees of the session. Credit unions with questions and concerns about alternative capital will have the opportunity to discuss them and gain additional information on the issue at an alternative capital summit NASCUS is planning to hold in 2006. [email protected]