Low-income credit unions and secondary capital
The Federal Credit Union Act allows low-income credit unions to count secondary or supplemental capital as part of their net worth.
Seventy-five credit unions, excluding Texans CU (Richardson, TX) and A.E.A FCU (Yuma, AZ), reported holding uninsured secondary capital accounts as part of their net worth as of the third quarter of 2014.
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Twelve credit union as of September reported that over fifty percent of their net worth is in the form of uninsured secondary capital accounts. This includes Self-Help FCU (Durham, NC), which reports 78.18 percent of its net worth is in the form of uninsured secondary capital accounts.
However, should there be a limit on the amount of secondary capital that low-income credit unions can count towards net worth?
As I have previously written, regulators are focused on increasing the amount of high quality capital that financial institutions hold.
