Newsroom

May 17, 2017

Berger, in CU Times, refutes bankers on alternative capital

NAFCU President and CEO Dan Berger hits back against banking trades' stated pique over the NCUA's opening of a discussion of possible forms of alternative capital for credit unions in an editorial published Wednesday by Credit Union Times.

In the piece, Berger frames the issue as one of safety and soundness for credit unions, and he invites banks to work with credit unions to get meaningful regulatory relief that would benefit both industries.

Last week, both the American Bankers Association and the Independent Community Bankers of America submitted comments to the NCUA criticizing the notion of alternative forms of capital as contemplated in an advance notice of proposed rulemaking. They raised the usual arguments, warning that NCUA may be overstepping its bounds, that the capital issue is tied to the credit union tax exemption and more. Berger corrected that misinformation and framed this as a discussion that comes down to safety and soundness. "Alternative capital could be just one option for credit unions to ensure continued financial stability," he writes.

NAFCU last week also submitted its comment letter to the NCUA on the issue. The association welcomed the ANPR and recommended that a framework be developed through a pilot program, similar to the one used for the derivatives rule.

The NCUA's ANPR focuses on supplemental capital, which federally-insured credit unions could use to meet NCUA's risk-based net worth requirement; and secondary capital, which is already authorized for low-income-designated credit unions.

NAFCU also continues to push for legislation that would create a fair capital system providing, among other things, access to alternative capital for all credit unions, regardless of charter type.