Filene Report: Allow CUs access to alternative capital

MADISON, Wis. (1/3/08)--It is in the public interest to permit U.S credit unions greater access to alternative capital sources, says a recent Filene Research Institute report.

In "Alternative Capital for U.S. Credit Unions? A Review and Extension of Evidence Regarding Public Policy Reform" author Robert F. Hoel explores the reasons why credit unions need alternative sources of capital, even though many credit union executives and economists believe credit unions are "overcapitalized."

Currently credit unions have only one source of capital--or sustenance--Hoel explains, and that is retained earnings. So credit unions tend to hoard retained earnings out of fear of a shortage. With alternative sources of capital, credit unions may be more efficient with their capital, Hoel said. (CU News Now)