NCUA Updates - 3/11/13
Here are two National Credit Union Administration (NCUA) updates:
Expanded Rural District Definition
The National Credit Union Administration's (NCUA) amendment to its definition of “rural district” in its Chartering and Field of Membership Manual now permits a geographic area to qualify as a rural district if, among other criteria, it has a total population that does not exceed the greater of 250,000 people or three percent of the population of the state in which the majority of the district is located. The previous limit was 200,000 people. The “three percent of the population of the state in which the majority of the district is located” alternate criteria allows credit unions in certain states to exceed the 250,000 size limitation when three percent of the state population exceeds 250,000. The Final Rule Analysis can be found here and the final rule can be found here.
Alternatives to the Use of Credit Ratings
The NCUA issued a final rule to replace in its regulations references to credit ratings with new standards of creditworthiness, as created by the agency. Specifically, the final rule removes references in NCUA’s rules to “nationally recognized statistical rating organization credit ratings” and puts in place two new standards: “investment grade” and “minimal amount of credit risk.” An “investment-grade” security is one in which the credit union determines the issuer has adequate capacity to meet the financial commitments under the security for the projected life of the asset or exposure even under adverse economic conditions. A security with “a minimal amount of credit risk” is one in which the issuer has a very strong capacity to meet the financial commitments under the security. According to NCUA, the agency will issue supervisory guidance on the final rule prior to the June 11 effective date. The final rule becomes effective June 11, 2013. The Final Rule Analysis can be found here and the final rule can be found here.