Congressmen Peter King (R-N.Y.) and Brad Sherman (D-Calif.) reintroduced supplemental capital legislation in the House Friday.
According to the NCUA, most federal credit unions can only raise capital through retained earnings, which limits its ability to expand into fields of membership more effectively and to offer better options to eligible consumers.
Larry Fazio, NCUA director of examination and insurance, requested congressional action on supplemental capital during a recent Senate Banking Committee hearing.
The Capital Access for Small Businesses Act would allow the NCUA board to let credit unions accept other forms of capital, as long as the board's action does not alter the cooperative ownership structure of credit unions.
King and Sherman introduced similar legislation in the last session of Congress.
"We believe your legislation would provide credit unions with appropriate ability to raise capital from sources other than retained earnings without putting in jeopardy the 'one member, one vote' principle that is the bedrock of the credit union ownership structure," CUNA President/CEO Jim Nussle wrote in a letter to the lawmakers.
NAFCU Vice President of Legislative Affairs Brad Thaler said the Senate Banking Committee's recent regulatory relief hearings are a positive sign for passage of supplemental capital legislation.
"You saw members on both sides of the aisle say they would like to try to tackle legislation. Obviously the committees will work through what the legislation ultimately looks like," he said. "But I think that's a real positive message that on top of their agenda they see regulatory relief, talking about issues for credit unions and community institutions right off the bat so we see that as a real positive sign to try to get some things moving in this Congress."
Nussle said supplemental capital could play an even more significant role for credit unions if NCUA's revised proposed risk-based capital rule is adopted.
"Your legislation could provide credit unions with access to the additional capital they need to continue to lend and serve their members in a safe and sound manner," he wrote to the sponsors of the bill.
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