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.
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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