The tide went out and Congress saw who was swimming naked: some credit unions who relied too much (or only) on credit ratings when evaluating the creditworthiness of securities for their investment portfolios. So, in Section 939A of the Dodd-Frank Act, Lifeguard Uncle Sam ordered credit unions to step into conservative bathing suits before wading back into the fixed-income sea.

Section 939A obligates credit unions to change the way many have long conducted creditworthiness checks when buying securities and to perform ongoing creditworthiness checks for existing securities in their. It effectively prohibits credit unions from relying only on ratings agencies when determining the creditworthiness of securities, and directed federal agencies like the NCUA to draft new creditworthiness rules to replace exclusive reliance on rating agencies.

Those rules became effective June 11, 2013. In a Supervisory Letter published last summer, the NCUA writes that its new rules do not "substantively change" the standards federally chartered credit unions should use when deciding which securities to buy. Rather, the NCUA is replacing the various NRSRO ratings with a standard of "investment grade," which they define as a security whose "issuer has an adequate capacity to meet all financial commitments under the security for the projected life of the asset or exposure, even under adverse economic conditions. An issuer has an adequate capacity to meet financial commitments if the risk of default by the obligor is low, and the full and timely repayment of principal and interest on the security is expected."