Supporting financial services in lower-income communities is not the same as promising safety to everyone supplying the money. The NCUA's February 8, 2017 advance notice placed that distinction inside its discussion of secondary capital. This funding channel was already permitted for low-income-designated credit unions, but the accounts were uninsured and subordinate to other claims. [2017-01713][2015-26790]
Those conditions give the ethical question a concrete form. Secondary capital had to be available for specified operating losses, and amounts consumed by those losses could not be restored. It also required an approved plan and a minimum five-year maturity. Describing it merely as money for community lending would leave out the provider's place in the loss-bearing arrangement. [2017-01713][2015-26790]
The agency was separately considering supplemental instruments that would count only toward the risk-based requirement. Its 2015 final rule scheduled a new risk-based framework for January 1, 2019. The relevant provisions concerned federally insured natural-person credit unions exceeding $100 million in quarter-end assets in the latest Call Report, rather than every institution or every prompt-corrective-action revision. [2017-01713][2015-26790]
A fair explanation must therefore hold two interests together: the ambition to support member services and candour about the obligations attached to capital. Neither the consultation nor the earlier rule proved that lending had expanded. The future schedule was not present authority to issue supplemental capital. This is a question of clear responsibilities between institutions and providers, not a claim that any ethical tradition endorses a particular financing instrument. [2017-01713][2015-26790]
Source documents
- Alternative Capitalhttps://www.govinfo.gov/content/pkg/FR-2017-02-08/html/2017-01713.htm
- Risk-Based Capitalhttps://www.govinfo.gov/content/pkg/FR-2015-10-29/html/2015-26790.htm