ALEXANDRIA, Va. (2/15/13)--Final rules addressing Treasury Inflation Protected Securities (TIPS) and rural districts will lead the day when the National Credit Union Administration holds its next open meeting on Feb. 21.
The NCUA in September 2012 released a proposed rule to allow federal credit unions to purchase TIPS as a permissible investment. Currently, TIPS are not a permissible investment because TIPS reprice their value based on changes in the consumer price index, which is currently a prohibited index for variable rate instruments. However, the agency believes that TIPS will provide an additional investment portfolio risk management tool.
Allowing such investments, as proposed by the NCUA, will allow credit unions to protect against inflation and manage interest-rate risk, Credit Union National Association Deputy General Counsel Mary Dunn has noted.
The rural district final rule follows a September NCUA proposal that would provide more flexibility to federal credit unions serving rural areas by expanding the rural district definition to geographic areas with 200,000 or fewer inhabitants or less than 3% of a given state's population.
Dunn last fall said the NCUA proposal does not go far enough to provide meaningful relief to those credit unions that provide services to rural communities. She urged the NCUA to allow as much authority as legally permissible to federal credit unions to facilitate their presence in these areas of the country that are often are in serious need of financial institution services.
The quarterly insurance fund report will also be presented by NCUA staff.
The open meeting is scheduled to begin at 10 a.m. ET.
A final rule addressing NCUA employee conduct is the lone item on the closed meeting agenda. The closed meeting is scheduled to begin at 11:15 a.m.
For the full NCUA agenda, use the resource link.