ALEXANDRIA, Va. (2/21/13)--The National Credit Union Administration meets this morning to address final rules addressing Treasury Inflation Protected Securities (TIPS) and the definition of a "rural district" for field of membership purposes.
In September, the NCUA proposed to extend the "rural district" definition to include geographic areas with 200,000 or fewer inhabitants or less than 3% of a given state's population. The Credit Union National Association has urged the agency to take the definition further and 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.
Also on today's agenda, the NCUA will decide whether to allow federal credit unions to purchase TIPS as a permissible investment. Currently, they are not a permissible investment because TIPS re-price 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.
CUNA supports the plan, saying it will allow credit unions to protect against inflation and manage interest-rate risk.
The meeting is expected to be brief as only these permissive rules and a quarterly report on the National Credit Union Share Fund are on the agenda.