Streamlined secondary capital approval offers benefits to credit unions, investors

NCUA Adds Flexibility, Transparency through Supervision Process

ALEXANDRIA, VA (April 6, 2015) — Low-income credit unions and investors will find secondary capital processes easier under revisions to the National Credit Union Administration’s supervisory policies.

“Under my Regulatory Modernization Initiative, NCUA seeks to lift compliance burdens from credit unions where it’s prudent and consistent with safety and soundness,” Board Chairman Debbie Matz said. “Sometimes, that’s accomplished through regulation; other times, through supervisory changes. The supervisory changes related to supplemental capital make it easier for low-income credit unions to obtain, and give investors greater clarity and confidence. We’ve also added more flexibility and transparency.”

Matz said the changes to the agency’s National Supervision Policy Manual were aimed at achieving two goals: expediting the approval of secondary capital requests by regional offices and making it possible for credit unions that have secondary capital to return portions of the loans that no longer count towards net worth.

The revised procedures can be found in the updated section of the agency’s National Supervision Policy Manual, available online here.

Secondary capital helps low-income credit unions expand services and maintain capital levels by supplementing net worth.

In December, Matz announced that William Myers, Director of NCUA’s Office of Small Credit Union Initiatives, would chair a secondary and supplemental capital working group that will, among other things, consider ideas for raising the value of secondary capital for low-income credit unions. Representatives from credit unions and secondary capital investors are being consulted as the working group identifies investment models that are likely to be successful in the marketplace.

The working group will publish a secondary capital web page later this month. Interested parties may email comments to the group at

NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 99 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At and Pocket Cents, NCUA also educates the public on consumer protection and financial literacy issues.

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