ALEXANDRIA, Va.—NCUA has released a supervisory letter it provided to field staff related to low-income-designated credit unions' (LICUs) ability to offer secondary capital accounts.
In a Letter to Credit Unions, NCUA Board Chair Rodney Hood stated that "the supervisory letter updates the framework the NCUA uses to analyze and approve or deny secondary capital plans." He noted that many LICUs prudently use secondary capital to protect against future losses, and to provide underserved communities with access to capital.
"However, some planned uses of secondary capital can be complex and involve higher risk," Hood explained. "The supervisory letter reflects that the NCUA scales its expectations and review based on the complexity and risk associated with a LICU's secondary capital plan. The NCUA's analysis of secondary capital plans is intended to ensure that LICUs comply with applicable laws and regulations and that secondary capital plans represent safe and sound endeavors."