NCUA Rejects Secondary Capital Bid

ALEXANDRIA, Va. (07/25/01) - NCUA said it won't count as net worth an unprecedented $1 million of uninsured share issued by State Employees CU of North Carolina, despite a Big Five auditor's declaration the shares should count as net capital. "The U.S. Congress has spoken on that issue and they said we can't count secondary capital under the net worth requirements of PCA (prompt corrective action)," a top NCUA official, told The Credit Union Journal. He explained that the CU Membership Access Act, which set minimum capital standards for all federally insured credit unions for the first time, defines net capital, or net worth, for credit unions as retained earnings.