ALEXANDRIA, Va.-According to a recent opinion letter by NCUA General Counsel Bob Fenner, federal credit unions may guarantee public deposits held by other credit unions when required by state law as a condition of accepting deposits under NCUA's incidental powers rule. However, the federal credit union must receive approval from the NCUA Board or their designee to do so. Currently, Florida state law does not list credit unions as acceptable institutions for public depositories, but banks and thrifts are permitted so long as they guarantee the funds of other institutions of the same type. The Florida Credit Union League is looking to change the statute to add credit unions. Fenner quoted the Federal Credit Union Act, which states, "Except with the prior written approval of the Board, no insured credit union shall merge or consolidate with any other insured credit union or, either directly or indirectly, acquire the assets of, or assume liability to pay any member accounts in, any other insured credit union." The board or its designee will then consider the federally insured credit union's financial condition, adequacy of reserves, management, and related factors, he wrote. "The FCU Act does not prohibit FICUs from becoming public depositories under the terms of Florida's Security for Public Deposits Act," Fenner concluded.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.