ALEXANDRIA, Va. (4/22/13)--The National Credit Union Administration on Friday sent out two letters: One on low income credit union (LICU) changes and a second letter that addresses creditworthiness and credit risk guidance for corporate credit unions.
The LICU letter was sent to federally insured state-chartered credit unions. The letter highlights recent NCUA procedural changes that streamline the process for state-chartered credit unions to determine if they are eligible for a LICU designation. The NCUA and the National Association of State Credit Union Supervisors (NASCUS) in February announced a joint plan that allows state regulators to provide limited geographic and income data to the NCUA when they upload their examinations.
The NCUA said it will use that data to determine if there are state-chartered credit unions eligible for the low-income designation and provide a list to state regulators on a quarterly basis of those credit unions. State regulators have the sole authority to make the LICU designation for state-chartered credit unions.
The creditworthiness and credit risk guidance follows a December final rule that replaces the ordinal credit rating scale used by natural person and corporate credit unions with a pair of new standards: "investment-grade" and "minimal amount of credit risk." The NCUA in the new corporate credit union guidance said it expects corporate credit unions to follow this final rule by maintaining "the credit quality of their securities, their issuers, and any counterparties, in all investment transactions."
The letter also provides a detailed outline of the credit rating rule, which is scheduled to come into effect on June 11.
For both letters, use the resource links.