NCUA Board Headlines: Bank Note Investment Flexibility and Positive Net for Stabilization Fund

It pays to give feedback to credit union regulators. A credit union employee’s call to the NCUA Investment Hotline is credited with helping to drive Thursday’s board approval of a final rule providing regulatory relief for federal credit unions that invest in bank notes.

“A caller to NCUA’s Investment Hotline suggested removing just one word from our rule would eliminate an unnecessary limit on federal credit union investments,” NCUA Board Chairman Debbie Matz said. “We looked into this matter and found the limit was not only unnecessary, but unintended. So, we’re making this change today to expand bank note offerings available to federal credit unions and diversify investment portfolios.”

According to NCUA, once the rule takes effect, federal credit unions will have access to a larger pool of permissible bank note investments.

“This change will result in cheaper execution prices, more flexibility, and greater efficiency in finding suitable bank note offerings,” NCUA announced.

The other major headline from the NCUA Board meeting: the Stabilization Fund’s net position increased by $301.9 million in 2015, the result of legal recoveries from Wall St. firms sued for their contributions to the corporate credit union crisis. Improvements in the projected cash flows of the assets that secure NCUA’s Guaranteed Notes, a $156 million reduction in insurance loss expenses and $47 million from guaranteed fees also contributed to the positive growth.

Don’t expect a rebate.

NCUA says that “while the Stabilization Fund continues to have a positive net position, no funds are available to provide federally insured credit unions with an immediate rebate. NCUA must first repay outstanding borrowings from the U.S. Treasury. Future changes in the economy or the performance of the legacy assets, which secure the NCUA Guaranteed Notes, are likely to change the value of the assets NCUA and the Stabilization Fund can eventually access at the end of the Guaranteed Notes Program.”

More details from the meeting are available on the NCUA’s website.

Questions about this story? Contact Lynn Heider: 503.350.2225,

Posted in Federal, NCUA.