WASHINGTON – NCUA Chairman Debbie Matz today urged Congress to pass legislation that would allow credit unions to raise alternative forms of capital to supplement industry’s declining net worth ratios.
Matz told Senate Banking Committee Chairman Tim Johnson that some credit unions, especially those serving people of modest means, are discouraged from seeking new deposits for fear it will dilute their net worth ratio to regulatory suspect levels. “The risk of reputational damage from being branded less than well capitalized and in need of “restoring” net worth,” said Matz in a letter to the Senate leader, “is reportedly having a significant chilling effect on the willingness of some “well-capitalized” credit unions to accept new share deposits.”
Under Matz’s proposal, credit unions would be able to count the alternative capital as net worth.
The NCUA Chairman called on Johnson to support legislation that would allow healthy credit unions to issue additional forms of capital.
