Why does Southwest Corporate need an MCA?
The NCUA regulation, Part 704, requires all corporate credit unions to maintain a capital ratio of at least 4% (Southwest Corporate, because it intends to maintain certain expanded investment powers, must maintain at least a 5% ratio). To achieve this, Southwest Corporate must rely both on its reserves and undivided earnings, and on its member-contributed capital. The NCUA regulation permits Southwest Corporate to take member-contributed capital deposits. MCA complies with this provision. Given the extraordinary market conditions, on April 21, 2009, the NCUA took action allowing the use of an alternative capital level for purposes of regulatory compliance with NCUA’s corporate credit union rule. The NCUA Board’s Order stated that for purposes of compliance, corporate credit unions may use their capital levels, as reported on their November 30, 2008 Call Report, for purposes of determining regulatory compliance with the capital-based requirements and limitations in Part 704. As of Novem
