MADISON, Wis. – In the midst of the industry's ever-changing regulatory landscape, would members be inclined to invest in capital-building products beyond traditional credit union lines of business and to what extent could those products help raise secondary capital for credit unions? A new report from the Filene Research Institute, Secondary Capital Products: An Assessment of Member Interest, looks at possible options. Members at five institutions were asked to gauge their level of interest in various forms of long-term certificates of deposits, which tend to be more easily understood and potentially more attractive for consumers than other forms of capital instruments, Filene said. The researchers discovered that member willingness to acquire a long-term CD is greater when deposit insurance covers the total value of the CD, annual percentage yield is given for a bundled product, annual percentage yield is greater, comparative product information is provided, member financial knowledge is low, and member acceptable financial risk level is above average; and member financial assets are less than $50,000. Although U.S. credit unions are currently unable to offer long-term certificates of deposit as a means to generate secondary capital, future regulatory changes may open doors to provide this type of capital-generating product sometime in the future, Filene noted. "Credit unions are unique institutions in that they have no mechanism through which to raise additional capital except retained earnings," said George Hofheimer, Filene director of research. "As the credit union industry changes and as banking regulatory parity gradually becomes the rule, ongoing studies of potential alternative sources and measures of credit union capital are essential." -

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