To the Editor:
Your Aug. 8 article "Corporate CU Equity Ruling" incorrectly states that the National Credit Union Administration ruled membership capital accounts could be classified as equity. The National Credit Union Administration does not permit corporate credit unions to classify membership capital accounts as equity.
Generally accepted accounting principles (GAAP) dictate what is permitted to be classified as equity. Membership capital accounts are not considered GAAP equity as they can be withdrawn with … a minimum three-year notice. However, membership capital accounts are available to cover losses that exceed retained earnings and paid-in capital. Additionally, membership capital accounts are not insured by the National Credit Union Share Insurance Fund or other share or deposit insurance and cannot be pledged against borrowings. Because of these capital characteristics, membership capital accounts are considered a component of regulatory capital for compliance purposes.Kent D. Buckham, director
Office of Corporate Credit Unions
