ALEXANDRIA, Va. — Even though NCUA allows federal credit unions to use federal and state banks and state trust companies to serve as safekeepers of their investments, the practice may not be a common practice.NCUA's Call Reports do not track whether federal credit unions house their investments outside of the industry, according to Cherie Umbel, a spokeswoman with the regulator. In an Oct. 8 opinion letter, the agency reminded credit unions that a financial institution, such as a wholly owned subsidiary of a registered bank holding company, is eligible to act as an investment safekeeper for a federal credit union.Guy Messick, general counsel for NACUSO, has worked with the NCUA on guidance on a number of investment-related issues including extending certain Securities and Exchange Commission exemptions to credit unions and most recently, commenting on the protocol when a registered representative leaves one brokerage firm for another.During a CUSO conference last week, Messick asked a few experts whether it is common for credit unions to go outside of the industry for investment safekeeping. Most agreed it would be an out of the ordinary partnership. One credit union consulting firm chairman and former corporate credit union CEO said he did not know of any credit unions that were using banks or their subsidiaries to hold securities."It's not something that comes up on my radar screen and apparently not from credit unions I've talked to," Messick said.In order for a federal credit union to use a bank or trust company as an investment safekeeper, the NCUA also requires board of director approval of the safekeeper and a written agreement obligating the safekeeper to exercise, at least, ordinary care. Obtaining and reconciling a monthly statement of investments and collateral held in safekeeping, as well as analyzing annually the safekeeper's ability to fulfill its custodial responsibilities, are also required.Generally speaking, credit unions tend to use corporates, wire houses or brokerage firms that are set up to work with institutional clients, said Pete Snyder, president of SCS, Snyder Consulting Solutions LLC, an investment and insurance service consultation firm. He suspects that the subsidiaries of bank holding companies could be managing various portfolios for other institutions or their parent banks. Within this mix may be federal credit union CEOs that have formed relationships with these subsidiaries."In general, from my exposure, it's not a common practice," said Snyder of credit unions linking up with banks or their subsidiaries for investment safekeeping. "What I don't know or suspect might be happening is that bank holding companies that have the ability and regulatory [approval] to do this are, but may be doing it on the retail side."Whether partners should be sought from within the industry, Snyder said from a collaborative perspective, entities have to earn the right to get credit unions and CUSO's business."For the most part, larger, cooperative CUSOs have a significant value proposition and have earned the right to get business from credit unions. While there's no reason credit unions can't go outside of that umbrella, it's always refreshing to see them go the cooperative and collaborative CUSO route."–[email protected]