Op-ed: Alternative capital proposal
‘best opportunity’ in 20 years
Feb. 22, 2017 -- The proposal on alternative capital now out for comment by NCUA presents the state credit union system with the best opportunity in 20 years to speak out on this issue, NASCUS President and CEO Lucy Ito writes in a column published this week by CUToday.info.
And she urged the state credit union system to weigh in on the proposal between now and May 9, when the comment period ends.
“A regulatory proposal on supplemental capital has been years in the making, overcoming apathy in some corners of the credit union system, antipathy in other corners, distraction by the varied issues of the day (including risk-based capital), and even a freeze on new regulations by President Donald Trump,” Ito writes in the op-ed. “Yet, despite all of that, movement on supplemental capital for credit unions – in the form of comments on an advance notice of proposed rulemaking about the issue -- is now taking place, thanks to the leadership of NCUA Acting Chairman Mark McWatters and Board Member Rick Metsger.”
The NASCUS leader conceded that the proposal (issued as an “advance notice of proposed rulemaking” Jan. 19, and published in the Federal Register on Feb. 8, beginning a 90-day comment period) holds a number of issues within its 50 pages. But she said she is confident that the state credit union system – which, through NASCUS, has been urging the acknowledgement of supplemental capital for 20 years – can overcome the challenges presented by the issues.
“My confidence is rooted in the long-term commitment by the state system and NASCUS to bring about supplemental capital for the credit union system generally,” she wrote. “At NASCUS, our view for the past nearly 20 years has been that a capital structure limited exclusively to retained earnings significantly disadvantages credit unions in facing unexpected economic shocks, and penalizes well-run institutions that are dealing with the ups and downs of the economy, such as simply attracting deposits too quickly from consumers in a “flight to safety” that credit unions offer.