Investment Reports: Are your directors up to date?

While some consumers got pulled into the GameStop investing frenzy, credit unions are limited in the kinds of investments they can make and strive to be responsible with their members’ money. Depending on their balance sheets and overall portfolios, many credit unions are interested in investing beyond traditional loans and CUSOs. Generally, investing is handled by management or an experienced third party. While a credit union’s board of directors can delegate in this area, in line with fiduciary duties, the board bears the responsibility for credit union investment decisions. Chapter 12 of the NCUA’s Examiner’s Guide states:

“The credit union board of directors may delegate the authority, but not the responsibility, for making investment decisions. The board must retain ultimate responsibility.” (Emphasis added).

Now that we understand there is a potential disconnect between investment management and responsibility, how does a credit union bridge the gap? Fortunately, the NCUA covers this in its regulations.

Generally, NCUA Regulation, Section 703 governs investment requirements for credit unions. Under Section 703, there are several reporting requirements that a credit union is required to fulfill, depending on the type of investment.


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