WASHINGTON -- NAFCU and the Association of Corporate Credit Unions have written in favor of expanding the bankers' bank exemption from reserve requirements under the Federal Reserve's Regulation D.

Institutions that (1) are organized solely to do business with other financial institutions; (2) are owned primarily by the financial institutions with which it does business; and (3) do not do business with the general public, are currently exempt from the so-called "sterile reserves." Under a proposal by the Fed, the interpretation would be amended to add "and such others as the Board may determine on a case by case basis consistent with the purpose of the Act and the bankers' bank exception," to that list.

Mike Canning, executive director of the ACCU, explained the corporate credit unions' particular interest in the issue. "Since we believe that the proposal has the potential to provide benefits to bankers' banks in the way of flexibility and increase services to the financial community, ACCU urges adoption of the proposal...The ACCU believes that such a proposal would allow for the healthy evolution of the financial services industry as it relates to bankers' banks," he wrote in a comment letter to the Fed.

NAFCU President and CEO Fred Becker applauded the agency for bringing "the regulatory requirements...in line with the current realities of today's marketplace." He did ask for additional guidance on the standards applied for these determinations in the future should the proposal be adopted.