Reps. Peter King and Brad Sherman re-introduced a bill Friday that would open the door for credit unions to raise supplemental capital.
First introduced in the 113th Congress two years ago, the bill, known as the Capital Access for Small Business and Jobs Act, would permit credit unions to have access to supplemental capital in the form of payments into uninsured share accounts. Currently, retained earnings constitute the only available avenue credit unions have to raising capital.
Supplemental capital became a major topic of discussion during the recent debate on risk-based capital, with many industry figures, including NCUA Board Member J. Marc McWatters, arguing some plan permitting supplemental capital should have accompanied the risk-based proposal.
But NCUA cannot implement supplemental capital without Congress first passing a law calling for its creation.
Industry trade groups were quick to applaud King and Sherman for re-introducing the supplemental capital legislation.
"NAFCU thanks Reps. King and Sherman for their continued leadership on this issue," Brad Thaler, NAFCU vice president of legislative affairs, said in a statement Friday. "Supplemental capital is even more important now with the prospect of NCUA's second risk-based capital proposal, which could force some credit unions to shoulder a disproportionate amount of burden for the safety and soundness of the credit union industry."
According to CUNA President and CEO Jim Nussle, the King-Sherman bill would ease the process of raising capital "without putting in jeopardy the 'one member, one vote' principle that is the bedrock of the credit union ownership structure."
John Fairbanks, a spokesman for NCUA, said Friday that officials there had not yet studied the language of the bill, but he added that NCUA has supported supplemental capital legislation in the past.