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Their regulator has achieved for them by administrative fiat what they have been unable to accomplish in Congress.
August 13 -
The Small Business Lending Enhancement Act would let credit unions help small businesses and our economy without costing taxpayers a dime. Whether lifting the cap creates one job or 1,000, it would be a success.
August 1 -
Navy Federal's strategy gives everyone else in the industry yet another way to get around the cap. Puzzlingly, some credit unions relentlessly press for legislation.
July 26
Clifford Rossi’s argument (
Secondary capital lacks an important characteristic that is associated with core capital – permanence. Secondary capital is subject to maturity limits, which means this form of capital is distinctly different and less reliable than internally generated capital. Therefore, any capital instrument that can mature should not be categorized as core capital.
Additionally, the inclusion of secondary capital as part of a credit union’s net worth would represent a significant divergence in the regulatory capital treatment of credit unions and banks. U.S. bank regulators are in the process of adopting the Basel III capital framework. Basel III requires increases in both the amount and the quality of regulatory capital relative to banks’ risks, including a greater reliance on common equity. The secondary capital instruments would not count as common equity under the Basel III framework.
If credit unions want access to capital, there is an alternative: they can switch to a mutual savings bank charter. This would give the freedom to raise capital, while retaining their cooperative structure.
Keith Leggett is vice president and senior economist for the American Bankers Association.
