NCUA OKs Corporates' Request

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NCUA's Office of Corporate Credit Unions (OCCU) issued a guidance letter last week that permits corporates to pay market gains upon early redemption of term deposits, according to CUNA and the Association of Corporate CUs (ACCU). ACCU had been discussing the issue with NCUA for several months. In its ruling, NCUA stated that corporates would only be permitted to pay the member credit union an amount equivalent to principal and accrued dividends less the estimated replacement cost. The agency said the regulation does not require a penalty if there is no replacement fee.

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