Modifying the investment rules to allow credit unions to invest in debt instruments on which principal and interest are NCUA guaranteed will make it more likely credit unions will be able to invest in the NCUA's guaranteed notes, NAFCU Associate Director of Regulatory Affairs Tessema Tefferi wrote the agency.
He added that "permitting NGNs to be assigned zero risk-weighting creates an incentive for credit unions interested in investing in the debt instruments as credit unions will not have to consider the adverse affect that such investments would have on their PCA net worth."
In October, the NCUA approved a rule changing the definition of low-risk assets to extend 0% risk weighting to debt instruments backed by the NCUA.
