CUs' Capital Needs Could Benefit From Use of Bank Strategies

MADISON, Wis. – A new study released by the Filene Research Institute finds credit unions could use several strategies already used by banks to meet their capital requirements. In particular, the study – Capital Instruments for Credit Unions: Precedents, Issuance and Implementation finds – cites the use of trust preferred securities and pooling mechanisms. The report by economist James A. Wilcox of the Haas School of Business, University of California, Berkely, concludes that use of subordinated debt is feasible for many credit unions. "For regulators, subordinated debt would impose an element of direct market discipline on the industry," they said. For information on ordering copies of Capital Instruments for Credit Unions: Precedents, Issuance and Implmentation, contact the Filene Research Institute at (608) 231-8550 or their Web site, www.filene.org.