MADISON, Wis. - (04/25/03) -- Credit unions could properlystructure and price secondary capital offerings, such assubordinated debt, to help them meet their capital requirements,according to a new study by the Filene Research Institute. The study, 'Subordinated Bet for Credit Unions,'concludes that allowing credit unions to issue subordinated debtwould impose an element of market discipline on credit unions. Thehigher interest (dividends) required for such offerings wouldreduce the temptation of excessive risk-taking, it said. The studywas based on a review of community banks' use of secondary capital,particularly trust preferred securities and pooling mechanisms, tomeet their capital needs.
Secondary Capital Could Meet CUs'Needs
April 28, 2003, 1:00 a.m. EDT 1 Min Read
