The National Credit Union Administration Board unanimously adopted a final investment rule establishing parameters for risk assessment while permitting credit unions to operate flexibly within those parameters. The intent of final Part 703 regulation , Investment and Deposit Activities, is to ensure that both credit unions' boards of directors and management can only authorize the purchase of investments they understand. A three-tier system will determine which level of requirements a credit union operates by based on the complexity of risk in its investment portfolio.
Regulatory burden is minimized for credit unions with a simple portfolio of investments.
It clarifies a number of areas, adds restrictions on certain securities determined to be inappropriate for credit unions, broadens authority in certain areas, and requires a credit union's staff and board of directors to meet certain safety and soundness standards regarding the potential risks of investment options. Credit unions establish their own risk limits and measure, monitor, and control the risks they decide to take. NCUA examiners will review policy statements during routine, annual examinations and make recommendations for modification where appropriate. The regulation implements three levels of requirements. At the simplest level, a credit union that limits investments to certificates of deposit and corporate credit union deposits need not monitor their value.