New White Paper Reinforces Need for Credit Union Access to Supplemental Capital

March 14, 2011 - A new white paper authored by Dr. James A. Wilcox titled “Reforming Credit Union Capital Requirements” presents a strong case that supplemental capital is an important and necessary reform for credit unions.

The white paper was commissioned on behalf of the Credit Union Supplemental Capital Coalition, a broad-based group of credit unions who support expanded capital authority for credit unions.

In the paper, Dr. Wilcox explains that current credit union capital requirements restrict credit unions’ ability to both act as safe harbors for depositors and to act as a counter cyclical source of lending. The author demonstrates that better access to capital for credit unions would enhance safety and soundness as well as contribute to the economic recovery.

The paper also responds to a 2004 report of the Government Accountability Office (GAO) which concluded that the limited capital authority of credit unions was adequate at that time. Dr. Wilcox explains that given the financial markets and credit crisis of 2007-2009, the credit union capital system must evolve in response to the changes in the financial landscape.

“With better access to capital, not only could the safety and soundness of credit unions be enhanced, but credit unions would be positioned to offset the reduction in bank lending that has contributed to past recessions and slowed the current economic recovery,” wrote Wilcox.

NASCUS has long supported supplemental capital for credit unions and continues to advocate for the necessary legislative changes. “Dr. Wilcox’s paper reinforces NASCUS and state regulators long held belief that permitting credit unions access to supplemental capital not only makes sense, but it is critical to the safety and soundness of the credit union system,” commented NASCUS President and CEO Mary Martha Fortney.

To view the full white paper, click here.