Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

Washington
CUNA What Basel III could mean to CUs
WASHINGTON (9/14/10)--As global bank regulators, including those in the U.S., reached a Basel III agreement over the weekend on broad reforms that will make banks hold more capital as a buffer against future financial shocks, credit unions may wonder how the accord’s ripples may affect them. The international bank rules, which create a new leverage ratio for banks with a 7% requirement, of course, do not apply to credit unions. However, as domestic bank regulators begin to discuss these new capital standards for banks, that discussion could provide a new backdrop for and focus on a conversation about alternative capital for credit unions. “The good part is the 7% capital ratio for banks would now be the same as the credit union requirement, and we should be able to use that to support the case for letting credit unions count more than just retained earnings as capital,” said Credit Union National Association (CUNA) Chief Economist Bill Hampel Monday. U.S. credit unions--excluding those with low-income designation--are among the only financial institutions in the world lacking access to capital beyond retained earnings. And fallout from the country’s economic crisis has underscored the importance of investigating alternatives. “In a low-earning environment, retained earnings is a painfully slow way to build needed capital,” Hampel noted. Gaining access to sources of alternative capital would require congressional action, so if the Basel III agreement helps turn federal regulators’ and lawmakers’ attention to the topic of financial institution capital, it might help ramp up the volume of credit union arguments for the need for alternatives, Hampel noted. The National Credit Union Administration issued a supplemental capital white paper in April that outlined three models for alternative capital: voluntary patronage capital, mandatory membership capital, and subordinated debt. Use the resource link for more information.
Other Resources

RSS





print
News Now LiveWire
Registration lottery for #CreditUnion #CherryBlossom Ten Mile Run opens Monday, Dec. 1 http://t.co/AGkKPof5Fy. Race is April 12
1 Day ago
The turkey hasn't even been served and #creditunions are already making plans for #GivingTuesday
1 Day ago
.@bankofamerica's $16.65 billion 'toxic mortgage' settlement finalized http://t.co/BIq1QyImXG
1 Day ago
RT @CUNA: #NussleReport: ICYMI: Revised RBC proposal in January w/a 90-day comment period #Fix RBC http://t.co/T4JcvWBDse
1 Day ago
.@TheNCUA release on Nov. prohibition orders out already. Here: http://t.co/YkA1QIYbYa
1 Day ago