GAO Study of Secondary Capital in the Works

WASHINGTON-In June 2003, three lawmakers asked NCUA and the General Accounting Office to answer some questions they had about credit unions’ capital options. NCUA responded by the September deadline but GAO simply said they had “little to contribute” in addition to what NCUA had already provided. Those three lawmakers-House Financial Services Committee Chairman Mike Oxley (R-Ohio), Ranking Member Barney Frank (D-Mass.), and Member Brad Sherman (D-Calif.)-decided GAO should do some more digging. According to GAO Director of Financial Markets and Community Investment Rick Hillman, since that time his staff has been in contact with the members’ offices to discover precisely what they are looking for. While the study is still in the preliminary design stage, it will encompass a review of NCUA’s response, evaluation of pros and cons, identifying alternatives, according to a Nov. 25 letter from Hillman to Sherman. No deadline has been established for the complete study yet, Hillman said, but they do plan to complete the design stage by March 5 at which time a completion target date will be set. During the design phase, Hillman’s team is looking for what are researchable questions, methodology, and data sources. NCUA, CUNA, NAFCU, and NASCUS have all been contacted by GAO for consultation on the study, which will be ongoing. Hillman said he also hopes to talk with Treasury officials, particularly Assistant Secretary for Financial Institutions Wayne Abernathy who has expressed an interest in the subject, the Federal Reserve, and academics in the field. Sherman has previously introduced amendments to relevant legislation regarding secondary capital and has expressed interest in introducing legislation this session.