Feb. 21, 2013 – The NCUA Board is set to take final action today on a proposed new definition of “rural district” for chartering purposes and a rule to allow federal credit union investments in Treasury Inflation Protected Securities.
NCUA Chairman Debbie Matz (right) and Board
Member Michael Fryzel are
set to act today on
what is a "rural district" and an FCU investment
rule. (NAFCU photo)
The rural district proposal, as originally released, would allow credit unions to obtain a rural district charter if the population is up to 200,000 persons (the current definition) or no more than 3 percent of the population, whichever is higher. NAFCU has been in contact with NCUA to encourage broadening of the proposed new definition.
NAFCU also wrote in support of the TIPS investment proposal as a first step in providing qualified credit unions increased flexibility and added investment powers.
The principal in a TIPs increases with inflation and decreases with deflation. Upon maturity, the holder of the security is paid the greater of the adjusted principal or original principal. NCUA says the instrument could be used as an asset/liability management tool. NCUA has allowed this investment under a pilot program since 1998.
Today’s open board meeting also includes a report on the National Credit Union Share Insurance Fund. In December, NCUA reported the fund at 1.32 percent of insured shares on Nov. 30. By then, it had deducted $287 million from its loss expense provision for the year. NCUA Chairman Debbie Matz has said the agency hopes to get through 2013 without assessing a share insurance premium.
The NCUSIF has received a clean audit opinion for 2012, though the report points to a continuing need to refine the agency’s methodology for determining loss projections. NAFCU is urging the agency to manage the NCUSIF reserves as close to expected losses as possible.