ALEXANDRIA, Va.—NCUA will share its plans for a supplemental capital rule during the agency’s open board meeting today.
The NCUA board has slated an advance notice of proposed rulemaking on alternative capital for today’s meeting. Also on the agenda is a Board Briefing on the statutory inflation adjustment of civil money penalties.
“The NCUA board has long been publicly stating that they are working on a rule to allow supplemental capital for risk-based capital purposes for credit unions,” said Andy Price, CUNA senior director of advocacy and counsel. “They have been working on this since they finalized the risk-based capital rules. They have been struggling with it for various reasons and issues—many of which center around securities ramifications and some potential state taxation issues, as well as how to generally structure the program so it will be effective for credit unions.”
As CUToday.info reported, during the agency’s October board meeting, staff stressed that supplemental capital and secondary capital are two separate things and should not be confused. Moreover, alternative forms of capital will mean new rules and potentially even other regulators for a credit union to deal with in the SEC and OCC. Staff noted credit unions that turn to supplemental capital would need to deal with rules related to broker-dealers, investor advisory roles, state regulations and filing fees. In addition, there are a host of anti-fraud rules that NCUA would need to research, write, propose, put out for comment and eventually adopt, the agency stated in October.
NCUA Director of Examination and Insurance Larry Fazio last year stated that proposed rulemaking in 2017 around supplemental capital “would be great way to get stakeholders involved. An ANPR would allow a public vetting before staff proposed any rule.”
Today’s ANPR is the “next step” in NCUA’s process to bring forward a supplemental capital rule, noted Price.
“We are grateful NCUA is taking this step and look forward to working with them as this rulemaking process moves forward,” said Price.
NAFCU concurred.
“NAFCU has long-supported NCUA providing credit unions with more flexibility to meet capital requirements. We look forward to Thursday’s discussion and working with the agency on this critical issue going forward,” said NAFCU Executive Vice President of Government Affairs/General Counsel Carrie Hunt. “NAFCU has also championed legislation that would create a fair capital system providing, among other things, access to alternative capital for all credit unions, regardless of charter type.”