NCUA Proposal on Purchase, Sale, and Pledge of Eligible Obligations.
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NCUA is proposing to streamline its rule on the purchase, sale, and pledge of eligible obligations (12 CFR 701.23).
What NCUA is proposing:
- Remove the prescriptive lists of items that FCUs must address in their written purchase, sale, and pledge policies
- Remove the detailed code of conduct in paragraph (g) governing conflicts of interest and compensation tied to these transactions
- Make a conforming redesignation (current 701.23(h) becomes 701.23(g)) and update the cross-reference in the appeals rule at 12 CFR 746.201(c)
- Comments are due April 27, 2026
Why NCUA is making the change:
- The current one-size-fits-all framework is viewed as unduly burdensome, especially for smaller FCUs
- The FCU Act requires NCUA to issue rules in this area but does not require a detailed framework for internal credit union policies
- An FCU's board is in the best position to scale policies to its own activities and risk profile
- The existing compensation prohibition, with a narrow list of exceptions, is seen as inflexible and may hinder legitimate incentive structures
- FCUs are already governed by broader conflict of interest provisions in their bylaws and by the fiduciary duties of their officials
- The change aligns with a more principles-based supervisory approach
What is NOT changing:
- FCUs must still maintain written policies covering purchase, sale, and pledge of eligible obligations
- Board approval remains required, and transactions must be conducted at arm's length and in the best interest of the credit union
- The underlying statutory authority under section 107(13) of the FCU Act is unchanged
- Examiner oversight of these activities continues
- The rule applies only to FCUs — the basic framework for FISCUs is unaffected
10,000-foot takeaway: NCUA is shifting from prescriptive checklists to principles-based expectations for eligible obligation policies. FCUs get more flexibility to tailor their written policies and incentive structures, but they also keep full responsibility for safe and sound operations. Boards should start thinking now about how their existing policies would hold up under a principles-based exam — the guardrails are coming out, but the accountability is not.
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