The NCUA's proposed prompt corrective action rules for corporates would give the regulator greater authority than it has today.
Not only would corporates who fall below adequately capitalized status be required to file a detailed capital restoration plan that would be subject to NCUA approval, they would also be prohibited from allowing daily average net assets to exceed moving DANA, unless part of the approved restoration plan. Additionally, corporates would be prohibited from certain growth strategies.
If a corporate's capital restoration plan is denied, and/or the institution slips into significantly undercapitalized status, the NCUA proposes additional powers.
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Such a corporate could be subject to forced recapitalization, dictated share and deposit rates, prohibition from paying dividends on contributed capital or subordinated debt, restrictions on current business and new growth, the replacement of directors or senior executives with NCUA-approved candidates, limited payments to senior executive officers, salary increase freezes and conservatorship, liquidation or forced mergers.
In the case of a state-chartered corporate credit union, the NCUA would consult with, and seek to work cooperatively with, appropriate state officials before taking any PCA action.
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