Broader CU concerns holding up alternative capital regulatory review

INDIANAPOLIS – Concerns about alternative or secondary capital generally are holding up the NCUA's regulatory review of how low-income and community development credit unions may use money invested as secondary capital, according to Anthany LaCreta, NCUA's director of credit union development. Currently, NCUA allows low-income credit unions to attract investments to use as secondary capital against their Prompt Corrective Action (PCA) calculation. But, in each of the last five years of the terms of those investments, NCUA requires the credit union discount 20% of the investment. Thus a credit union which might have a $100,000 loan at 1% from a major bank or foundation for seven years can only fully count that investment as secondary capital for two years. In the third year of its term, the start of the NCUA's five year countdown, the credit union can only count $80,000 of it. Low-income credit unions want the agency to review its regulation to see how that restructuring might be changed. But LaCreta said that concerns about how its actions might impact the conversation credit unions are having on secondary capital generally are slowing the agency's review of the regulations.