Time is running out to comment on the NCUA's Advance Notice of Proposed Rulemaking on alternative capital. The breadth and depth of the ANPR's questions signal strong support at both the NCUA board and staff levels for providing credit unions the additional flexibility and strength that contributed capital could bring. Those interested in submitting comments have until May 9, 2017.

The ANPR uses the term "alternative capital" to refer to both "secondary capital" and "supplemental capital." Secondary capital is available today to all low-income designated federal and state credit unions. Under the Federal Credit Union Act, a "secondary capital account" is uninsured and subordinate to all other claims of the credit union, including the claims of creditors, shareholders and the NCUSIF. It is therefore available to absorb losses that exceed the credit union's retained earnings. Low-income designated credit unions can use secondary capital to help meet both net worth ratio and applicable risk-based net worth requirements.

Neither the FCUAct nor NCUA rules currently recognize any form of alternative capital other than secondary capital. However, the NCUA is contemplating authorizing all credit unions (not just LICUs) to issue "supplemental capital." According to the ANPR, the NCUA currently believes only subordinated debt would be permissible supplemental capital for federal credit unions (although other structures might be available to state-chartered credit unions). As currently contemplated, supplemental capital would only be useful in meeting credit unions' risk-based net worth requirements.