WASHINGTON (10/12/09)—The Credit Union National Association (CUNA) is moving forward with a proposal to the National Credit Union Administration on additional capital for credit unions as a result of an agreement with the National Association of Federal Credit Unions(NAFCU). Under the proposal, credit unions would be allowed to obtain alternative capital from their members and limited other sources, according to CUNA President/CEO Dan Mica. Mica said Friday, “This proposal has potential for giving credit unions access to additional strength to help them weather economic downturns and other strains on their capital base. It is the result of careful consideration that began with the CUNA board meeting in Estes Park, Colo., last month, and subsequent discussions with NAFCU.” Mica added that the proposal will soon be forwarded to NCUA for its review and concurrence. “With CUNA and NAFCU now in agreement, CUNA strongly believes that the agency has an opportunity to act with Congress in this current environment,” CUNA’s leader said. He noted that CUNA will also be working with the National Association of State Credit Union Supervisors on the proposal. The proposal would allow credit unions to accept and count as capital funding from such sources as:
* Members of the credit union; * Sponsors and member select employee groups of CUs; and * Assistance provided to credit unions by government in limited circumstances (such as Section 208 assistance).
In each of these cases, the additional capital would not be federally insured and could pay a higher return on interest. The additional capital would also be subordinated to other claims against the credit union. “We are hopeful the NCUA can soon review this proposal, so that the credit union movement can move forward in a united fashion in presenting it to the Congress for full consideration,” Mica said. “In today’s financial climate, we feel an urgency and opportunity exists for congressional action to assist the nation’s credit unions in best serving their members.”