In days gone by it would have been called "dropping a dime" -- a tipster's phone call to government authorities to point them in the right direction.
But the call that swung regulators into action Thursday could be worth a whole lot more to federally chartered credit unions.
The National Credit Union Administration's three-member board voted unanimously to amend the maturity requirement for investing in bank notes. Under the reworded regulation, which takes effect 30 days after publication in the Federal Register, federal credit unions will be permitted to invest in notes with average weighted maturities of less than five years.
While federal credit unions have been permitted to invest in bank notes for nearly 20 years, their purchases are currently restricted to notes carrying original weighted average maturities of five years or less.
Erasing the word "original" from the regulation should result in a significantly larger pool of potential investments, John Nilles, a senior capital specialist in NCUA's office of examination and insurance, said at the agency's March meeting.
Board Chairman Debbie Matz said a tip phoned in to NCUA's investment hotline set events in motion.
"A caller suggested removing just one word from our rule would eliminate an unnecessary limit on federal credit union investments," Matz said. "We looked into the matter and found the limit was not only unnecessary, but unintended. …I know people figure that if they know then we must know, but that is not always the case. We are always willing to listen."
The rule change, first introduced in October, was among the quickest in her nearly seven years leading the agency, Matz said.
Matz, who took office in August 2009, announced earlier this month that she plans to step down at the end of April.
In other actions, the board unanimously approved a proposal to create two temporary management positions to spearhead a $25 million project to upgrade the systems NCUA uses to conduct examinations.
The work, which is scheduled to begin in June and will take about four years to complete, should enable examiners to do more of their work offsite as well as permit them to access all the information they require from one source, officials said.
Examiners would be able to remotely review information about their assigned credit unions and would have better analytical tools. "Better business intelligence and data analytics are definitely a value-add," Chief Information Officer Ed Dorris said.
In response to a query by board member J. Mark McWatters about whether the system improvements might open the door to an 18-month exam cycle, John Kutchey, NCUA's deputy executive director, said such an outcome was possible. "Could it lead to longer exam cycles? This could definitely make that easier" to accomplish, he said.
Currently, NCUA examines federal credit unions every 12 months.
Lucy Ito, president and chief executive of the National Association of State Credit Union Supervisors, called the project long overdue and said state credit union regulators would back it enthusiastically. "We look forward to collaborating with NCUA to the fullest extent possible," Ito said.
