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The NCUA on Thursday released a supervisory letter, providing guidance regarding how examiners will supervise compliance with a November 2012 final rule that substitutes a narrative standard in place of credit rating requirements for investments.

The guidance addresses why ratings have been removed from the regulations in compliance with the Dodd-Frank Act, and provides regulatory expectations for natural person and corporate federal credit unions when they consider creditworthiness factors. Credit unions may still use credit ratings to augment their due diligence, but per the final rule, cannot use ratings as the sole basis to determine an investment’s suitability, the supervisory letter said.

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