"NCUA, as a federal agency operating with the full faith and credit of the U.S. government, must ensure the ability to perform on the payments under the NGN guarantee program," read Mary Ann Woodson from the memo.

Three members of the new committee will be Fazio, along with Mike Barton, director of NCUA's asset management and assistance center and Woodson.

Initially Fazio will serve as chairman, but the NCUA board could reassign the chairmanship. The committee will meet at least every quarter to discuss bond status and emerging issues.

Much of the committee's work will be devoted to necessary recordkeeping and managing vendors that share the responsibility for managing the bonds.

"We recognize that managing bonds of this type and on this scale is not a core agency competency," Fazio acknowledged, "so we anticipate continuing to need to use outside vendors."

Responsibilities that are attached to the bond management include overseeing the bonds for their performance and the agencies responsibilities toward them, Fazio explained, monitoring the agency's compliance with applicable laws and regulations and maintaining the data on the bonds and their performance.

This latter responsibility will also include a new website, accessible from the agency's website, that Fazio said would contain information on bond performance and other details in a format lay people and investors can understand.

The staff hoped the new website would be ready for the public within four to six weeks, Fazio said.

He described for the board how the committee would have to make day-to-day decisions impacting the bonds, such as whether to accept the payoff of mortgages in a bond or other economic decisions which could not wait for the NCUA board.

 "Although the legacy assets backing the NGNs will not be actively traded, the NCUA will need to make certain decisions concerning the legacy assets over the life of the NGNs," the staff wrote in the memo supporting the committee creation. "These decisions may arise in the context of legal or corporate actions requested by legacy asset trustees, the exercise of an optional termination clause under a trust indenture, or action on put-back options on the legacy assets."

In addition, Fazio and Woodson pointed out that the NCUA position with the bonds was further complicated because the agency was not just the bond seller but also their sponsor and guarantor.

"Timely payment of principal and interest under the guarantee is critical," the staff wrote in a memo supporting the move. "This involves substantial time and effort in monitoring the multiple trusts, the underlying legacy assets, and the cash position of the TCCUSF from which guarantee payments will be made.

"After receiving a notification from the trustee, the NCUA must remit any required guarantee payment within five business days. Failure to perform under the guarantee would result in a default under the NGN documents and lead to accelerated legal and financial liabilities for the NCUA, immediate credit union assessments to allow for payment while in default, probable intervention by the Treasury Department, and possible erosion in public confidence in the full faith and credit backing of the U.S. government."