Feb. 22, 2013 – The NCUA Board’s final rules on the definition of “rural district” and allowing federal credit union investments in Treasury Inflation Protected Securities mesh well with NAFCU’s five-point plan for regulatory relief, NAFCU President and CEO Fred Becker said.
“NCUA’s determinations today on both ‘rural district’ and TIPS are steps in the right direction,” Becker said of Thursday’s board actions.
‘Rural district’ expanded
NCUA Board Member Michael Fryzel and Chairman
Debbie Matz approved final rules on "rural district" and
FCU investments in Treasury Inflation Protected Securi-
ties. Both rules take effect in about 30 days.
- NAFCU photo.
The NCUA Board’s final rule on rural district caps a rural district charter field of membership at 250,000 persons or 3 percent of the population in the state that includes a majority of the district, whichever is higher. Previously the limit was 200,000 persons. Becker said NAFCU supports more of an expansion but called Thursday’s decision “a good start.”
According to NCUA, 43 federal credit unions have rural district charters, and the final rule allows an FCU in any state to have a rural district charter that includes up to 250,000 persons. The larger definition will affect institutions in the 11 most populous states.
TIPS rule adds flexibility
Becker welcomed the flexibility created by NCUA’s final rule on TIPS investments. NAFCU has said it would like to see more steps like this in the future to allow more decision-making by individual federal credit unions.
NCUA sees the TIPS investment authority as a way to manage portfolio risk. While a TIPS has a fixed interest rate, the twice-yearly interest payments may rise and fall with adjusted principal. TIPS is indexed to the U.S. dollar-denominated London Interbank Offered Rate, or LIBOR.
Both the rural district and TIPS investment rules take effect 30 days after publication in the Federal Register. NAFCU is preparing online Final Regulations for members.