NCUA Board Approves Pilot Investment
Program Designed
To Enhance Credit Union Member
Business Lending
Alexandria, VA, March 17, 2005 ─ The National Credit
Union Administration (NCUA) Board approved a third-party provider investment
pilot program today which is designed to enhance member business lending
opportunities for America’s credit unions.
The Board approved a pilot program developed by CUNA Mutual Group’s
CU System Funds, a private investment fund, which will purchase loans
from credit unions and sell shares in the fund as investments to interested
credit unions. The approval will permit credit unions to purchase shares
in CUNA Mutual Group’s member business loan funds.
“CUNA Mutual’s pilot program is an innovative approach
to improve liquidity for member business loans and allow credit unions
to better serve their member business lending needs,” said NCUA
Chairman JoAnn Johnson. “This program will allow originating
credit unions selling their member business loans to the funds to lower
their balance sheet risk, by reducing credit exposure. We look forward
to reviewing the progress of the program and how credit unions benefit
from this secondary market alternative.”
“This innovative pilot program is designed to diversify the
risks for credit unions investing in member business loans,” pointed
out NCUA Board Member Debbie Matz. “Just as important, we have
established clear regulatory boundaries for this pilot program that
will limit the risk exposure for investors, require a meaningful participation
stake for sellers, and set high standards for third-party providers.
I believe this pilot has the potential to create a viable secondary
market for credit union member business loans, and thereby strengthen
credit unions’ safety and soundness.”
The aggregate $1 billion program will allow credit unions to invest
in shares of a series of funds holding a portfolio of credit union
originated member business loan participations.
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