[Code of Federal Regulations]

[Title 12, Volume 6]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR703.19]



[Page 404-405]

 

                       TITLE 12--BANKS AND BANKING

 

            CHAPTER VII--NATIONAL CREDIT UNION ADMINISTRATION

 

PART 703_INVESTMENT AND DEPOSIT ACTIVITIES--Table of Contents

 

Sec. 703.19  Investment pilot program.



    (a) Under the investment pilot program, NCUA will permit a limited



[[Page 405]]



number of Federal credit unions to engage in investment activities 

prohibited by this part but permitted by the Act.

    (b) Except as provided in paragraph (c) of this section, before a 

Federal credit union may engage in additional activities it must obtain 

written approval from NCUA. To obtain approval, a Federal credit union 

must submit a request to its regional director that addresses the 

following items:

    (1) Certification that the Federal credit union is ``well-

capitalized'' under part 702 of this chapter;

    (2) Board policies approving the activities and establishing limits 

on them;

    (3) A complete description of the activities, with specific examples 

of how they will benefit the Federal credit union and how they will be 

conducted;

    (4) A demonstration of how the activities will affect the Federal 

credit union's financial performance, risk profile, and asset-liability 

management strategies;

    (5) Examples of reports the Federal credit union will generate to 

monitor the activities;

    (6) Projections of the associated costs of the activities, including 

personnel, computer, audit, and so forth;

    (7) Descriptions of the internal systems that will measure, monitor, 

and report the activities;

    (8) Qualifications of the staff and officials responsible for 

implementing and overseeing the activities; and

    (9) Internal control procedures that will be implemented, including 

audit requirements.

    (c) A third-party seeking approval of an investment pilot program 

must submit a request to the Director of the Office of Capital Markets 

and Planning that addresses the following items:

    (1) A complete description of the activities with specific examples 

of how a credit union will conduct and account for them, and how they 

will benefit a Federal credit union;

    (2) A description of any risks to a Federal credit union from 

participating in the program; and

    (3) Contracts that must be executed by the Federal credit union.

    (d) A Federal credit union need not obtain individual written 

approval to engage in investment activities prohibited by this part but 

permitted by statute where the activities are part of a third-party 

investment program that NCUA has approved under this section.



[68 FR 32960, June 3, 2003, as amended at 69 FR 39832, July 1, 2004; 70 

FR 55517, Sept. 22, 2005]