CDs issued to non-member municipalities are insured by the NCUSIF on a pass-through basis, according to a legal opinion letter by NCUA Associate General Counsel Sheila Albin.
Those certificates of deposits would have to be invested through a third-party service, similar to the Certificate of Account Registry Service, which works with FDIC-insured banks.
"Although, generally, NCUSIF coverage only extends to member accounts, federal credit unions, and we believe most state-chartered credit unions, may accept funds from public units or government depositors without regard to membership," Albin wrote.
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She added that the credit union should practice "careful titling and recordkeeping" and be certain that the custodial relationship is disclosed.
Albin's opinion letter, which was a response to inquiry from Michigan Credit Union League President/CEO David Adams, was dated Oct. 23 posted on the NCUA Web site this week.
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