ALEXANDRIA, Va.–NCUA has approved an investment pilot program it said will allow complex federal credit unions to invest in a series of non-registered investment funds comprised of consumer loans. 

Specifically, through this program, the agency said it will permit up to 30 complex federal credit unions to engage in investment activities prohibited under part 703 but permitted by the Federal Credit Union Act. 

“The pilot fund would be comprised of permissible consumer loans for federally insured credit unions with maturities of less than 10 years and overnight investments,” the agency said in a statement. “Also, federal credit unions must be complex and have a capital adequacy classification of well capitalized to invest in the fund and are limited to an aggregate investment of 50% of net worth as defined in part 702 of NCUA’s regulations.”

What’s Authorized

As the agency noted, under part 703 of the NCUA’s regulations, federal credit unions are authorized to invest in funds that are registered with the SEC or regulated by the Office of the Comptroller of the Currency, provided the underlying assets purchased by the fund are permissible under NCUA rules for federal credit unions.

According to NCUA, the pilot program was requested by ALM First Financial Advisors in Dallas.