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Netting Provisions Possibly Changed in Bankruptcy Bill

WASHINGTON-Credit union groups are working to ensure credit unions receive the same treatment as other financial institutions in managing Qualified Financial Contracts in the event of insolvency. Title IX of the bankruptcy reform bill simplifies the handling of QFCs when one party becomes insolvent. NCUA has argued that the current...

By Sarah Snell Cooke | Updated on March 15, 2005

WASHINGTON-Credit union groups are working to ensure credit unions receive the same treatment as other financial institutions in managing Qualified Financial Contracts in the event of insolvency. Title IX of the bankruptcy reform bill simplifies the handling of QFCs when one party becomes insolvent. NCUA has argued that the current law is out of date and needs updating. The modernization, as currently written would ensure the predictability of QFC treatment and brings the Federal Credit Union Act more in line with the Federal Deposit Insurance Act treatment of such contracts. It clarifies the notice and timing rights of the NCUA Board as liquidating agent to transfer or repudiate any QFC and gives the board flexibility as liquidating agent to transfer QFC’s held by failed insured credit unions to other market participants. CUNA and U.S. Central Credit Union have worked on new language for the credit union provisions, according to CUNA Vice President of Legislative Affairs and Senior Legislative Counsel Gary Kohn as reported in News Now. Several corporate credit unions in the money markets are particularly interested in the issue. [email protected]

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