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Commentary

CU Supplemental Capital Is a Decade Overdue

NASCUS and state regulators remain steadfastly supportive of supplemental capital for credit unions.

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?

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Peter Westerman

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