Inclusiv Advocacy Update: Subordinated Debt
Over the years many Community Development Credit Unions (CDCUs) have relied on secondary capital to grow, but in January 2022, a new National Credit Union Administration (NCUA) rule went into effect that replaced secondary capital with subordinated debt. The new rule is complex and many credit unions, particularly small, MDI credit unions, have not been able to access the capital they need as a result.
Recently, the NCUA made needed updates to the rule that are helpful to credit unions that have received Emergency Capital Investment Program funds and that clarify some points of confusion, but the changes don’t address the key barriers CDCUs face in accessing subordinated debt.
As a result of Inclusiv’s advocacy on this issue, the NCUA Board committed the agency’s staff to working with Inclusiv to address the barriers to CDCUs accessing subordinated debt at the March Board Meeting. Although it’s too soon to declare the problem solved, Inclusiv staff and Government Affairs Committee members are committed to making the subordinated debt application and issuance process accessible to and affordable for small CDCUs.
If you’re interested in applying for subordinated debt as a test case to help us develop an accessible process with the NCUA, please contact Ahmed Campbell.
If you’d like to get involved in the policy work, please contact Alexis Iwanisziw.
Stay tuned for updates as they develop.