CUNA: Bank notes proposal will give CUs access to add’l investments

November 24, 2015

WASHINGTON (11/14/15)--CUNA supports the National Credit Union Administration’s proposal on bank notes, it told the agency in a comment letter filed Monday.

Proposed at the agency’s October board meeting, the rule would amend the maturity requirement for bank notes to be permissible investments for federal credit unions by changing the current requirement that bank notes have ‘‘original weighted average maturities of less than five years’’ to having “weighted maturities of less than five years.”

“We see no additional risk to credit unions resulting from this change as credit unions would still not be able to hold bank notes with maturities that are five years or more,” CUNA’s letter reads. “The proposal would give credit unions access to additional investments as the actual maturity of a bank note becomes the requirement instead of the original issue maturity.”

The proposal should also “increase credit union access to bank notes, which could lower investment costs and/or increase net returns,” CUNA wrote.

As with the current rule, credit unions would only be allowed to purchase bank notes with maturities of less than five years.