Guaranteeing Deposits

02-0504A / May 2002
Guaranteeing Deposits

Edward Boughal, President/CEO
Suffolk Federal Credit Union
3681 Horseblock Road
P.O. Box 9005
Medford, Long Island, NY 11763

Re: Guaranteeing Deposits.

Dear Mr. Boughal:

My letter to Conrad Schlund dated April 5, 2002, concerning the permissibility of a federal credit union (FCU) pledging a security as collateral for deposits or shares in excess of $100,000, incorrectly states that an FCU may pledge the loans of its members as collateral for shares. As explained in the attached letter from me to Christopher Turner dated July 31, 1997, an FCU may only pledge its loans to secure obligations. An FCU may not pledge its loans to secure shares, which are considered equity, except for the limited purpose of receiving public monies of the United States, states, local governments, or political subdivisions. 12 U.S.C. §1767(b). Enclosed is a revised version of my April 5 letter to you that reflects NCUA’s current interpretation.

I apologize for any confusion this may have caused.

Sincerely,

/s/

Sheila A. Albin
Associate General Counsel

GC/MFR:bhs
SSIC 3000
02-0504a

cc: Lynn Lodge, Analyst, Region I

Last modified on
08/14/20