ALEXANDRIA, Va. – NCUA said yesterday it will insure CDs issued to non-member municipalities through a third-party placement service, such as the Certificate of Deposit Account Registry Service, a well-known service which places municipal CDs in several states.
In a new legal opinion posted yesterday, NCUA said federally insured credit unions could participate in a share or deposit placement service and the National CU Share Insurance Fund would insure funds from public municipalities on a pass-through basis, subject to proper disclosure and titling and recordkeeping requirements.
The legal opinion was issued to the Michigan CU League and comes just days after Oakland County (home of Detroit) passed a resolution accepting credit unions as valid depositories for the county’s funds.
CDARS is a deposit placement service Promontory Interfinancial Network, which spreads deposits to banks in Michigan and several other states. Credit unions, said NCUA, could participate in a share placement service similar to CDARS but it would most likely be feasible only for funds from “public units,” which includes states, municipalities, and political subdivisions.
“Although, generally, NCUSIF coverage only extends to member accounts, federal credit unions, and we believe most state-chartered credit unions, may accept funds from public units or government depositors without regard to membership,” said NCUA. “For purposes of NCUSIF coverage, nonmember public unit accounts are insured as member accounts.”
