The NCUA Board approved two new rules during its Februarymeeting Thursday that expand investment powers and field ofmembership reach.

The maximum threshold for rural district field of membershippopulations will increase to 250,000, a nudge up from the current 200,000maximum. The rule also includes a new caveat that the ruraldistrict not exceed 3% of the state's total population.

Chairman Debbie Matz said when the board revised the limit in2010, it wrestled with settling upon an appropriate number, andchose 200,000 thinking it could be revised if needed. Credit unionsin high-population states like Texas, New York and California toldthe NCUA it was too restrictive. And, Matz said she met one creditunion CEO in South Dakota who said the limit kept him from servinga nearby Native American reservation.

Reservations are typically financially underserved, Matz said,so raising the limit is a “move in the right direction” towardfulfilling the rule's intent to serve underserved areas, as well asshowing responsiveness to credit union feedback.

NAFCU Legal Counsel Carrie Hunt said she was pleased with theincrease, but said her trade was pushing for a higher 500,000threshold. NCUA Staff Attorney Elizabeth Wirick had told the boardwhen presenting the rule that a 500,000 limit was close to theentire population of seven states and the District of Columbia.

Hunt said that shouldn't stop the NCUA from approving500,000.

“The NCUA has stated an entire state can't be a rural district,but I think it's more of a policy argument than a legal one,” shesaid.

The rule will take effect 30 days after it is published in theFederal Register.

A second approved final rule allows credit unions to purchaseTreasury Inflation Protected Securities. The rule was firstpresented as an audience question during a 2012 Town Hall hosted byMatz. Aside from cautions by staff that credit unions fully understand TIPSaccounting and interest rate risk modeling before investing, theinvestment was approved and will be permitted 30 days after it ispublished in the Federal Register, which puts it on target for nearthe end of the first quarter.

The Board was also presented with share insurance fund year-endnumbers, which showed improved CAMEL scores in 2012, but also anincrease in the number of failed credit unions. Twenty-two creditunions failed in 2012; 14 were involuntarily liquidated and eightwere assisted mergers. Sixteen credit unions failed in 2011.

The Temporary Corporate Credit Union Stabilization Fund year-endbalance sheet showed an $807 million improvement in projectedlegacy asset losses in 2012, much of it coming in the4^th quarter, and an improved net position to $3.5billion in the red. The stabilization fund closed out 2011 with a$5.25 billion negative net position.

However, that improvement is countered by an increase inoutstanding Treasury borrowings, up to $5.1 billion at Dec. 31,2012, compared to $3.5 billion one year prior. Chief FinancialOfficer Mary Ann Woodson told the board proceeds of $1.14 billionfrom the asset management estate and an $88 million distributionfrom the share insurance fund didn't cover the $2.83 billion due asguaranteed income on securities issued on corporate legacyassets.