Credit unions could accept supplemental capital that wouldn't be insured by NCUSIF and would be subordinated to other claims, according to provisions of a bill introduced by Rep. Peter King (R-N.Y.) and Rep. Brad Sherman (D-Calif.).

Under the measure, credit unions could accept nonshare capital accounts and could use the money to cover operating losses in excess of their retained earnings. The accounts would be subject to maturity limits set by a credit union's board. In addition, the law mandates that the accounts would be subordinate to all other claims against the credit union, including those of creditors, shareholders and the NCUSIF.

The NCUA would have the power to determine whether a credit union is "sufficiently capitalized and well-managed" to be eligible to accept the capital.

Continue Reading for Free

Register and gain access to:

  • Breaking credit union news and analysis, on-site and via our newsletters and custom alerts.
  • Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders.
  • Educational webcasts, white papers, and ebooks from industry thought leaders.
  • Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, and

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.