WASHINGTON (UPDATED: 2/14/13, 3:45 p.m. ET)--Rep. Pete King (R-N.Y.) and Brad Sherman (D-Calif.) today reintroduced legislation that would permit the National Credit Union Administration to allow credit unions to accept additional forms of capital.
Credit Union National Association President/CEO Bill Cheney thanked King and Sherman for introducing the bill. "Your legislation would provide credit unions with the 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," he wrote in a letter to the legislators. "As credit unions emerge from the financial crisis, this legislation would improve the safety and soundness of credit unions by allowing them to develop a supplemental cushion to reduce risk to the National Credit Union Share Insurance Fund," he added.
The capital access bill recognizes that "capital is king" at financial institutions, and allows well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings--currently the only type of capital that counts at a credit union. It is substantially similar to H.R. 3993, which was introduced in the 112th Congress and gained 45 cosponsors.
The bill is the second piece of credit union charter improving legislation to be unveiled today: It follows the earlier release of legislation that would increase the credit union member business lending cap to 27.5% of assets, from the current 12.25%-of-assets level.