FISCUFederally Insured State-Chartered Credit Union (National Credit Union Administration)
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For states with more permissive investment limits, such an investment by a FISCU could represent a significant contingent claim on the net worth of the credit union if the CUSO fails; and thus could pose a significant risk to the credit union and the NCUSIF," Leggett wrote.
Rather than following a "one-size-fits-all" CUSO investment limit for a specific state where the FISCU is chartered, Leggett suggested the NCUA set different CUSO investment limits for all undercapitalized credit unions, both federal charters and state charters, based upon the activities of the CUSO.
Leggett said after conducting an analysis of NCUA Call Report data, it found there were 28 under capitalized FISCUs that had investments in CUSOs at the end of first-quarter 2011.