NCUA: Secondary Capital...

Despite their critics (many of whom may be permanently irreconcilable after the last, disastrous six years), the current NCUA Board has made "large progress, in little ways", the latest example being the simple extension of time given CU's to file quarter-end 5300 Call Reports. 

A "Big Deal"? ABSOLUTELY YES! It signals an 180-degree change in attitude in NCUA Board leadership; which, if pursued, is destined to "reform" the thinking of the NCUA senior staff. The Board has stepped-up to the task,

now the NCUA senior staff has the classic choice; "Lead, follow, or get out of the way." Let's hope for lots of innovative senior leadership! (... or the necessary departures!)

"Large progress" may already be at hand. The NCUA Board has promised an advanced notice of public rule-making (ANPR) on secondary capital in January.  The glaring absence of this additional alternative to enhance credit union safety and soundness well-defines the concerns many share over senior staff accountability, competency, and transparency. 

All other federally-insured institutions have this authority. The legal framework, accounting rules, and risk management structures for secondary capital have long ago been worked out, implemented, and tested in the marketplace. Rule-making for NCUA secondary capital should be little more than "cut and paste", the "regulatory heavy lifting" has already been done by their highly-competent, federal regulatory peers. But then again that was also the case with the now infamous risk-based capital (RBC) rule...

BTW, would you like to see the NCUA's senior staff "Working Group" (tempted to snark, but it's too easy...) secondary capital website? [here 'ya go!] 

Do note the following...

1) The "Action Bulletin"(again too easy... no comment) announcing the formation of the secondary capital "Working Group" in 2014.

2) The "Streamlined" approval process for secondary capital at low-income designated credit unions - over 1200+ CU's! Do you think that NCUA has no existing rules for secondary capital at these 1200+ CU's?

3) The "White Paper" published by the NCUA in 2010 supporting secondary capital! How long does it take the "Working Group" to read their own internal 35 page report?

4) The many global references that supplemental capital is already in place at credit unions around the globe!

It is universally agreed that access to secondary capital will improve the safety and soundness of credit unions, thereby protecting the NCUSIF and the American taxpayer - 

which is NCUA's primary responsibility under federal law, the FCUA...

... yet the NCUA staff still can't get it done!

ACCOUNTABILITY - COMPETENCY - TRANSPARENCY 

(ACT!)