California has 455 CUs with assets of $126.8 billion as of the end of 2009. California is therefore a good microcosm of all CUs. California CUs have total capital at Dec. 31, 2009 of $11.47 billion for an average net worth ratio of 9.04%. California CUs are growing, adding over 500,000 new members in the last three years. The question is whether California CUs, or in fact any CU in the United States, needs alternative capital. The easy answer is yes. Is there a better way to manage the capital that already exists in the CU system?

In the aggregate, analysis shows that there is sufficient capital to fund additional asset and member growth. The NCUA defines a 7% capital ratio as well-capitalized. In aggregate, California CU's current capital would support assets of $163.8 billion at a 7% capital ratio. California CUs could grow another $37 billion, or about 29%, from current assets levels without adding any more capital. That means there is enough surplus capital to support five years of asset growth given the rate of growth over the past five years.

It is fair to say that in aggregate we have enough capital. So where is the problem?