NCUA Issued Far-Reaching Corporate Overhaul
When doing the first major overhaul of corporate credit unions in eight years, the NCUA covered the regulatory waterfront.
The agency did everything from placing stricter limits on investment concentrations to limiting the activities of corporate credit union-owned CUSOs.
Other investment rule changes involved the simplification of weighted average life limitations. For example, the NCUA removed complex NEV chipping tests from the final regulations. Fazio said the controversial two-year weighted average requirement is still in the regulations, but the NCUA provided some leeway on government agency investments, granting them a 50% conversion factor. Now if a corporate purchased, for example, a four-year Treasury note, only half of its average weighted life-two years-would count for regulatory purposes.
Other rules grandfathered in involve the NCUA's new authorities over corporate-owned CUSOs. Corporate CUSOs may only engage in services preapproved by the NCUA, which initially includes limited services such as brokerage and investment advisory. CUSOs must also open their books, personnel records, equipment and facilities to NCUA monitoring. Rather than demand that CUSOs comply within 90 days of publication, they will be given 180 days to gain NCUA approval and a full year to divest from prohibited activities.