CUNA Breakdown of Corporate Reg - New Jersey Credit Union ...

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4. Is the provision of the proposed rule, section 704.5, permitting CCUs to investin national bank and mutual thrift collective investment funds (that make CCUpermissibleinvestments) as well as SEC-registered investment companiesappropriate? Should other types of investment funds be permitted? (pgs.65238, 65270)5. Is the proposed section 704.6 requirement that at least 90% of a CCU’sinvestment portfolio be rated by at least two nationally-recognized statisticalratings organizations (such as Moody’s, Fitch, and S&P) reasonable? (pgs.65240, 65271-272)6. Is it reasonable to require CCUs to use the lowest available ratings? (pgs.65240, 65272)7. Section 704.6 of the proposed rule would establish aggregate CCUinvestment limits by sector of the economy (e.g., residential MBS; commercialMBS; FFELP student loan ABS; private student loan ABS; credit card ABS;debt obligations of commercial corporations; registered investmentcompanies). Is it reasonable to establish sectoral limits? Should there beadditional concentration sublimits in any of these sectors (such as furtherlimits on corporate debt obligations by industry of the obligor)? (pgs. 65239,65271-272)14
8. Are the below proposed revisions to the CCU Expanded InvestmentAuthorities in section 704 appendix B appropriate? (pgs. 65237-238, 65282-283)a. Adds additional net-economic value (NEV) modeling requirements forCCUs to qualify for “Base-Plus” investment authorityb. Adds the requirement that a CCU have an at least 6% leverage ratio toqualify for Part I expanded authority and limit a CCU’s aggregate Part Iinvestments to the lower of 500% of capital or 25% of assets (andreduces the maximum dollar value of a Part I CCU’s outstanding repoand securities lending agreements to 200% of capital);c. Repeals the Part II expanded authorities (authorizing investments indebt instruments with credit ratings as low as BBB); andd. Modifies the existing Part IV expanded authorities “to ensure thatcorporates do not use derivatives to take on additional risk . . .”9. The proposed rule amends 12 C.F.R. § 704.11 to specify that permissiblecorporate CUSO activities include: brokerage services, investment advisoryservices, and other categories of services approved by NCUA in writing andpublished on www.ncua.gov. Should the rule specify any additionalcategories of pre-approved corporate CUSO activities? (pgs. 65249-250,65274)10. Section 704.11 of the proposed rule does not change a CCU’s aggregatelimitation on investments in corporate CUSOs (generally limited to 15% ofcapital) or aggregate corporate CUSO loans and investments combined(generally limited to 30% of capital). According to the preamble of theproposed rule: “data available to NCUA indicates that the level of corporateinvestment in CUSOs is significantly less than these . . . limits would allow,based on November 2008 corporate capital levels.” Should the existingcorporate CUSO investment and loan limits be reduced? (pgs. 65250,65274)15
Page 7 and 8: ! Exclusions from Sectoral Concentr
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Page 17 and 18: Liquidity Management NPR § 704.91.
Page 19: 4. Under the NPR, CCUs must disclos

CUNA Breakdown of Corporate Reg - New Jersey Credit Union ...

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