WASHINGTON (10/23/09)—The much-anticipated new rules for corporate credit unions could be considered the star of the National Credit Union Administration’s (NCUA’s) virtual town hall meeting Thursday, but the subject of alternative capital also got important attention. During an extensive Q-and-A period, NCUA Chairman Debbie Matz was asked for NCUA's reaction to a recent joint proposal submitted by the Credit Union National Association and the National Association of Federal Credit Unions on alternative capital. Matz responded that the agency is aware of the trade groups’ joint proposal. She added that current alternative capital rules come from a statutory requirement and is not something the NCUA can change without new statutory authority. Matz added that the board currently has not taken a position, but that it is her own view that there are some credit unions that would benefit from alternative capital. She warned that a change in alternative capital rules would not be a "magic bullet" and would not save all credit unions from troubles and, she added, the NCUA would not permit problem Code 4 or 5 credit unions to offer such capital to their members. Matz also opined that alternative capital must preserve the cooperative nature of credit unions and members and it must be transparent that these accounts are not insured. The chairman added that NCUA has not been asked by U.S. Congress for its position on the subject, but would respond when asked. In a separate development, Matz was quoted Wednesday by Bloomberg.com in a reaction to President Obama’s initiatives to promote credit availability for small businesses. She noted that credit unions that qualify as community development financial institutions (CDFIs), named in the administration plan, are the only credit unions currently allowed to receive outside capital. CDFIs serve low-income communities. She said, that Congress and the Obama administration "should consider whether to change the law so that other credit unions could receive outside funds." When opening the NCUA’s town hall meeting, Matz noted that more than 800 interested parties had tuned in for the session. Matz affirmed that a proposed final rule on the agency’s comprehensive revamping of the regulations governing corporate credit unions will be issued at the Nov. 19 open board meeting. The rule, NCUA General Counsel Bob Fenner reiterated, will have four key component parts. They are: capital, investments, governance and asset/liability management. Fenner assured listeners that the rule will include phase-ins and delayed effective dates “as appropriate.” There likely will be a 90-day comment period for the proposed final rule. The interim final rule generated more than 500 comments. The virtual town hall meeting followed the agency’s open board meeting which addressed insurance topics and approved a community charter conversion. (See related story: NCUA ratifies NCUSIF cap increase, community CU conversion.) For more on the NCUA’s corporate credit union rule, use the resource link below.