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Capitalization Proposal Could Use Net Worth Certificates

WASHINGTON -- A new proposal to have the federal government provide capital to community banks and credit unions could rely on a type of financial and regulatory instrument last used in the early 1980s.

By David Morrison | Updated on November 20, 2008

WASHINGTON — A new proposal to have the federal government provide capital to community banks and credit unions could rely on a type of financial and regulatory instrument last used in the early 1980s.

The New America Foundation has proposed that some of the money set aside to help financially struggling banks also be provided to healthy community banks and credit unions through a Community Banking Trust Fund. The nonprofit think tank proposed that the economy would be better served by more and stronger community banks because the model of very large banks has been discredited in the current banking crisis.

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