Corporate Credit Unions: Technical Corrections
- NCUA has issued an interim final rule, with a 30-day comment period, with three technical corrections to the final corporate credit union rule that was issued in October 2010.
- Specifically, the three technical corrections are:
- A correction to the definition of “collateralized debt obligation” (CDO) in Section 704.2 of the rule to ensure that commercial MBS; Agency MBS; and securities that are guaranteed by the U.S. Government, agencies, or government-sponsored enterprises are not prohibited. This definitional change is necessary to allow corporate credit union investment in the NCUA-Guaranteed Notes (NGNs), which are currently categorized as CDOs. NGNs do not present the risk of excessive losses, when subject to other credit risk and asset liability management limitations.
- A correction of the list of investments exempt from the single obligor limits and credit rating requirements in Section 704.6, for Credit Risk Management, to clarify that Agency MBS are only subject to the sector concentration limits but not the other requirements of this Section. This correction is necessary because NCUA did not intend for Agency MBS to be subject to the other requirements such as the single obligor and credit rating limits.
- A correction in the date language in Model Form H, which should be used “on or after” and not “before” October 20, 2011. This correction is necessary because the Model Form H concerns perpetual contributed capital and circumstances where the credit union has determined that it will give newly issued capital priority over older capital.
- The effective date for the interim final rule is January 19, 2011. Comments are due to NCUA by December 27, 2010; please submit your comments to CUNA by December 22, 2010.
- Please e-mail your comments to Senior Vice President and Deputy General Counsel Mary Dunn at firstname.lastname@example.org, and Regulatory Counsel Dennis Tsang at email@example.com. You may also contact Dennis Tsang at (800) 356-9655, ext. 6733, if you have questions.
- For further details, please click here for the comment request in the Federal Register.
Questions to Consider Regarding the Technical Corrections
- Do you have any concerns with these three technical corrections from NCUA?
Eric Richard General Counsel (202) 508-6742 firstname.lastname@example.org
Mary Mitchell Dunn SVP & Deputy General Counsel (202) 508-6736 email@example.com
Luke Martone Senior Regulatory Counsel (202) 508-6743 firstname.lastname@example.org