CUs and Banks Hook Up on the Hush Hush for Loan Participations

ALEXANDRIA, Va. — Those instances when banks and credit union can put aside their differences, meet in the middle and build connections are uncommon and kept relatively quiet, some would say.

That has certainly been the case in the loan participation arena. No one is quite sure how many arrangements are currently in place, but there are a few credit unions that have linked up with banks to buy and sell pieces of participation loans from each other. It’s permissible under NCUA’s rules and regulations for an FCU to “participate in making loans with eligible organizations,” which includes any federally chartered or federally insured financial institution, according to NCUA.