WASHINGTON — Corporate credit unions would have to keep a 5% core capital leverage ratio (including a certain percentage of retained earnings) to be considered well capitalized under rules that the NCUA plans to discuss later this year, NCUA Chairman Michael E. Fryzel told lawmakers today.
In prepared testimony before the House Subcommittee on Financial Institutions and Consumer Credit, Fryzel said his agency would require that a "significant amount" of a corporate's core capital consist of retained earnings. The rule will also include risk-weighted capital standards and require that all capital instruments qualify as Tier One or Tier Two capital.
The proposed rule would also eliminate distinctions between wholesale and retail corporates and would keep national fields of membership in place.
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Fryzel said the agency would also change the rules for directors of the corporates to include minimum qualifications for board members and transparency of compensation arrangements for senior managers.
The subcommittee is holding a hearing on the health of the corporate credit union system a day after the House and Senate passed a measure that includes a corporate credit union stabilization, which will pay for the costs of shoring up the problems of the corporates.
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