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The NCUA’s recently announced corporate resolution plan was designed to have minimal effects on the critical functions the corporates provide to their members. However, investment options with corporate credit unions have been significantly impacted by the plan. As part of the corporate resolution, the conserved corporates were barred from issuing certificates longer than six months. The surviving corporates have been affected too with most limiting their term offerings and others lowering the rates they are able to pay on share certificates.

As a result, many credit unions that had used corporates for term investments are now considering alternatives, namely marketable securities like agency bullets and callables. Most larger credit unions are quite familiar with the prerequisites for buying securities, tasks like conducting due diligence of brokers, establishing safekeeping relationships and accounting for the purchased bonds. Smaller institutions may not have these arrangements in place, and before undertaking the effort it makes sense for them to ask, “Is our credit union big enough to buy securities?”

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