The Capital Access for Small Businesses and Jobs Act

The Capital Access for Small Businesses and Jobs Act, (H.R. 719) was introduced by Representatives Peter King (R-NY) and Brad Sherman (D-CA) on February 14, 2013.The bill would empower the National Credit Union Administration (NCUA), the federal credit union regulator, to authorize qualified credit unions to accept additional forms of capital to supplement their retained earnings.

Expanded capital authority for credit unions will enhance credit unions’ ability to serve their members, promote the safety and soundness of the credit union system, and benefit the broader economy by facilitating increased credit for consumers and small businesses.

The legislation is necessary because current credit union capital requirements restrict credit unions’ ability to grow and serve members in their communities. Under current law, a credit union’s net worth ratio is determined solely on the basis of retained earnings as a percentage of total assets. As a consequence, a credit union that is successful in serving its members and attracting new shares runs the risk of diluting its regulatory capital ratio, triggering non-discretionary capital-based supervisory actions under prompt corrective action (PCA) rules.

These capital-based standards were never intended to discourage manageable asset growth by well-managed, financially healthy credit unions. This “PCA trap” is real and it harms consumers who need access to the reasonably priced financial services that credit unions offer.

Bill Summary and Status


How Supplemental Capital Will Benefit American Communities


Get to Know HR 719: The Capital Access for Small Businesses and Jobs Act

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“The more deposits credit unions get, the larger the denominator gets and that pulls down the net worth. So, even though it seems counterintuitive, when members have confidence in the credit union and they put their deposits in the credit union, it can pull down their net worth. So that’s why there are many credit unions that feel that they need to have access to supplemental capital. And I agree with that, if they are a healthy credit union and that the supplemental capital would be so that they do not have to discourage deposits.”

The Honorable Deborah Matz, Chairman
National Credit Union Administration