NCUA 2014 Legal Opinions

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OGC Legal Opinion 14-0502 Clarification of Amended CUSO Rule         
June 2014

NCUA was asked to clarify whether a federally insured credit union (FICU) receiving products or services from a CUSO must enter into a written agreement in which the CUSO is obligated to submit an annual report to NCUA even if the FICU does not have an investment in or loan outstanding to the CUSO. NCUA answered “NO,” a FICU receiving products or services from a CUSO is not required to enter into a written agreement obligating the CUSO to submit information to NCUA unless the credit union has made a loan to, or invested in, the CUSO.

NCUA’s CUSO rule is found in §712 of its Rules and Regulations. Parts of the CUSO rule, §712.2(d)(2)(ii), §712.3(d), and §712.4 and §712.11(b) and (c), apply to federally insured state chartered credit unions (FISCUs) by way of incorporation in §741.222.

NCUA’s final CUSO rule, published in November, 2013, requires FICUs investing in or lending to a CUSO to obtain a written agreement with the CUSO requiring the CUSO to submit annual reports to NCUA. The confusion regarding whether a FICU that merely receives services from a CUSO was likewise required to obtain such an agreement arose because of a provision in §712.3(d)(3) of the CUSO rule addressing NCUA and state regulator access to a CUSO’s books and records. However, the provision citing credit unions that receive services from a CUSO applies only to §712.3(d)(3) books and records access and was written to provide access to the books and records of a federal credit union's (FCU) CUSO to state regulators whose charters obtain services from the FCU CUSO.

OGC Legal Opinion 14-0311 Multiple Insured Parties Under Fidelity Bond
March 2014

NCUA was asked whether a federally insured credit union (FICU) may include one or more credit union service organizations (CUSOs) as additional insureds under its fidelity bond.  In Legal Opinion 14-0311, NCUA answered "NO," noting that its Rules and Regulations require all FICUs obtain fidelity bond coverage under an individual policy. (See 12 C.F.R. §§713.3(a), 741.201(a).)  

In making its determination, NCUA cited a previous legal opinion, Legal Opinion Letter 04-0744. In that Opinion, NCUA stated a CUSO that provides management services for multiple credit unions could not purchase a single fidelity bond with each credit union named as an insured. NCUA's reasoning for not permitting a credit union’s bond to cover additional insured entities is to ensure that there is no conflict in coverage or dilution of the individual credit union’s required coverage.


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