NCUA Paints Likely Corporate Picture Posted by AVCU on 11:06 AM

NCUA Chair Debbie Matz hosted a town hall meeting on the outskirts of Washington D.C. yesterday. The future of corporate credit unions dominated the discussion, but topics like alternative capital were also discussed. Matz says proposed rulemaking on changes to NCUA’s corporate credit union regulation is expected in November. An unofficial preview of the proposed rule included:

• Corporates will be required to have Tier 1 Capital (permanent, perpetual) of 4%; Tier 2 Capital (Member Capital Shares, etc.) of 4%
• Corporates will be required to have 100 basis points of earnings within 5-year period
• Boards will be made up of a majority of natural person CU leaders who must be either CEO, COO, or CFO
• NCUA will not force mergers or recapitalization of the corporate system
• Potential for 10 investment types in which corporates can participate, with 10% concentration limits in some of them

Many credit union representatives spoke vigorously about the need for the corporate network, especially for smaller to mid-size credit unions. By contrast, some larger credit unions expressed less need for corporates. NCUA stressed the need to keep liquidity in the corporate network and said the share guarantee and the SIP program have helped do this. Both U.S. Central and WesCorp are looking to external markets to issue debt to maintain liquidity.

On alternative capital, Matz noted that if CUNA and NAFCU come to NCUA as a united front with a position on alternative capital, NCUA will then evaluate the position and consider bringing alternative capital to Congress. CUNA and NAFCU are getting closer on a common position and are expected to issue their position to the agency in the coming days.