NASCUS and state regulators remain steadfastly supportive of supplemental capital for credit unions. We have believed for years that supplemental capital is appropriate for credit unions, a necessary tool for safety and soundness and critical to the credit union system's long-term health and sustainability.

As evidenced by the development of the third iteration of Basel standards, international regulators are capital planning far into the future and addressing prospective capital considerations for banks and other financial institutions. What are U.S. credit unions doing as far as capital planning for the future? Unfortunately, relying on just retained earnings for net worth does not provide needed flexibility for capital planning. How much longer can credit unions thrive and compete under these archaic capital standards?

Natural person credit unions that are not designated low-income remain virtually the only class of depository institutions denied access to supplemental capital. This distinction carries enormous implications for natural person credit unions' ability to manage both the current economic climate but also the eventual economic recovery. At a more fundamental level, it is ironic that the credit union system, with its emphasis on member participation in governance, remains a system where its very members are denied the basic ability to express their commitment to their credit union by recapitalizing it. Further, from a regulatory standpoint, a well managed supplemental capital program can provide increased systemic stability, additional balance sheet management tools and an extra buffer to mutualized losses.