ALEXANDRIA, Va.-Corporate federal credit unions and their credit union service organizations are permitted to assist member credit unions in purchasing and safekeeping of CDs issued by banks under NCUA regulation, NCUA Associate General Counsel Sheila Albin wrote in a recent legal opinion letter. Albin told Empire Corporate Credit Union Senior Vice President and General Counsel Christiane Hyland in the letter that the corporate's two models for performing the transaction are within the bounds of NCUA's regulations. In one model, the corporate would locate potential CD issuers, obtain approval for purchase, purchase the CDs with member funds on account and hold the CD as a safekeeper. NCUA's corporate provisions authorizing `investment services' and `custodial and safekeeping services' allow for these services, she explained. A corporate federal credit union qualifies as "a depository institution whose broker-dealer activities are regulated by another federal agency (12 C.F.R. 703.50(c))" under NCUA's investment rule, Albin said, and therefore does not have to register with the Securities and Exchange Commission. She also attached relevant Opinion Letter 01-0616 from September 2001 supporting her position. However, Albin warned, "Generally, the corporate should not modify the CD so as to make it a security or otherwise render it an impermissible investment for the member FCU." In the second model the corporate's CUSO, which is not registered with the SEC, would locate the CD issuer's and contact the member for purchase approval. If approved, the CUSO then asks the member to initiate a funds transfer from the corporate to the issuing institution. The CD would be placed on the issuers books in the member's name and include the corporate as the safekeeper. The corporate federal credit union would place any interest payments into the member's account and handle the associated paperwork. Because the CUSO would be restricted to assisting with the CD purchase, it is exempt from having to register with the SEC. While Empire's plan falls within NCUA regulations, Albin advised that the corporate check with federal and state laws, including securities laws. Additionally, she suggested Empire check with their examiner for safety and soundness issues prior to implementation.