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CUNA continues push for alt capital
WASHINGTON (12/18/09)—Noting that the issue continues to be a priority for many credit unions, the Credit Union National Association (CUNA) pushed its efforts to get the Obama administration on board with the idea of alternative sources of capital for credit unions. In its latest effort to garner support, CUNA reinforced to key contacts within the U.S. Treasury Department the importance of credit union alternative capital authority. “CUNA is acutely aware that some credit unions need to issue supplemental capital products in order to maintain their net worth ratio requirements,” CUNA General Counsel Eric Richard said. “We are reaching out to help the Treasury understand the dilemma some credit unions find themselves in.” "We have long maintained that secondary capital and PCA—-prompt corrective action--reform are required for credit unions for the long term. However, that future is here for some,” Richard noted. CUNA figures show upward of 15% of well-managed, well-capitalized credit unions are now sufficiently close to the PCA net worth cutoffs to be concerned that they could run into PCA issues in the mid- to near-term. CUNA has been aggressively pursuing reforms through meetings with Obama administration officials and federal legislators. CUNA also reached out to the National Association of Federal Credit Unions earlier this year in an effort to work together to obtain alternative capital for credit unions. In a recent development on PCA reform, National Credit Union Administration Chairman Debbie Matz, in a Dec. 7 letter to Rep. Barney Frank (D-Mass.), asked for legislators to address issues with PCA standards by allowing qualified credit unions "to issue alternative forms of capital to supplement their retained earnings." Frank is chairman of the House Financial Services Committee. Matz wrote, in part, that while the intent of PCA is to control potentially "accelerated, unmanageable growth of credit union assets," PCA can at times "discourage manageable asset growth by financially healthy credit unions in times of economic distress." CUNA President/CEO Dan Mica, at that time, commended Matz’s letter saying the agency chairman’s action clearly draws the connection between increased credit union service to the American public and the need for PCA reform and additional sources of capital for credit unions.


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