ALEXANDRIA, Va.-NCUA said last week that its corporate credit union resuscitation plan will require the surviving corporates to hold pledged capital in escrow accounts for the short-term so that all capital may be refunded to members if their corporate does not achieve the agency's new minimum capital standards by Oct. 2011.
If a corporate raises enough capital by Sept. 30, 2011 to meet NCUA's new capital standards, which take effect Oct. 20, 2011, the pledged capital in escrow will be converted to regulatory capital. However, if a corporate's capital subscription falls short, all pledged capital in escrow will be returned to members.
The initiative is designed to provide protection for natural person credit unions in the event their corporate does not raise sufficient capital by the deadlines, enabling each credit union to recoup its capital pledge.
"I am committed to setting forth clear and specific guidelines so that the credit union industry can make the kind of informed decisions warranted by a rule of this magnitude and importance," said NCUA Chairman Debbie Matz this afternoon.
The initiative comes as many of the 22 surviving corporates are soliciting members for pledges to create permanent capital that will allow them to continue operating.
