NCUA Rules On EmergencyFunding

ALEXANDRIA, Va. - (09/12/05) -- NCUA ruled Friday credit unionsaffected by Hurricane Katrina can sell off investments they plan tohold to maturity without compromising the integrity of theirfinancial reporting. In an emergency accounting bulletin issuedjust before the weekend, NCUA said all affected credit unions maysell held-to-maturity investments to fund liquidity, includingemergency withdrawals and loans, to aid affected residents of thestricken areas. Under generally accepted accounting principlesselling held-to-maturity investments may call into question anentity's intent to hold the remaining held-to-maturity securitiesto maturity and require them to mark those investments to theirmarket value. . The accounting bulletin is meant to dispel anyreluctance by credit unions to fund emergency liquidity needs byselling off their investments.