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Rep. Bachus joins list of co-sponsors on credit union capital access legislation

Spencer Bachus

Spencer Bachus

Rep. Spencer Bachus (R-Ala.), the chairman emeritus of the House Financial Services Committee, joined on Wednesday the list of co-sponsors for a measure aimed at enhancing credit unions’ access to capital.

The Capital Access for Small Businesses and Jobs Act, introduced in February by Reps. Pete King (R-N.Y.) and Brad Sherman (D-Calif.), would allow credit unions to offer non-share capital accounts that are uninsured, subordinate to other claims against the institution and are subject to maturity limits determined by the institution’s board.

The legislation, which is backed by the National Association of Federal Credit Unions, would also permit credit unions to offer capital accounts that are eligible to be applied to cover the institution’s operating losses in excess of retained earnings and are offered by a credit union the National Credit Union Administration designates as adequately capitalized and well-managed.

NAFCU said a credit union’s net worth ratio is calculated solely based on retained earnings as a percentage of total assets, adding that retained earnings are often outpaced by healthy asset growth—a factor that can dilute a credit union’s regulatory capital ratio and result in the need for additional capital and subsequent regulatory action.

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