Federal Register, Volume 77 Issue 207 (Thursday, October 25, 2012)

[Federal Register Volume 77, Number 207 (Thursday, October 25, 2012)]
[Proposed Rules]
[Pages 65139-65141]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-26129]

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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Parts 701 and 741

RIN 3133-AE09

Designation of Low-Income Status; Acceptance of Secondary Capital
Accounts by Low-Income Designated Credit Unions

AGENCY: National Credit Union Administration (NCUA).

ACTION: Proposed rule.

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SUMMARY: The NCUA Board proposes to amend its low-income credit unions
regulation by extending the time credit unions have to accept a low-
income designation. Under the current rule, an FCU that has received
notification from NCUA that it qualifies for a low-income designation
has 30 days to notify NCUA

[[Page 65140]]

that it wishes to receive the designation. Some FCUs may find it
difficult to respond this quickly, so the proposed rule extends the
response period to 90 days. The proposed rule also makes minor,
nonsubstantive technical amendments to NCUA's insurance regulation to
reflect current agency practice in this regard.

DATES: Comments must be received on or before November 26, 2012.

ADDRESSES: You may submit comments by any of the following methods
(Please send comments by one method only):
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
NCUA Web Site: http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html. Follow the
instructions for submitting comments.
Email: Address to regcomments@ncua.gov. Include ``[Your
name] Comments on Notice of Proposed Rulemaking for Parts 701 and 741,
Designation of low-income status'' in the email subject line.
Fax: (703) 518-6319. Use the subject line described above
for email.
Mail: Address to Mary Rupp, Secretary of the Board,
National Credit Union Administration, 1775 Duke Street, Alexandria,
Virginia 22314-3428.
Hand Delivery/Courier: Same as mail address.
Public Inspection: You may view all public comments on NCUA's Web
site at http://www.ncua.gov/Legal/Regs/Pages/PropRegs.aspx as
submitted, except for those we cannot post for technical reasons. NCUA
will not edit or remove any identifying or contact information from the
public comments submitted. You may inspect paper copies of comments in
NCUA's law library at 1775 Duke Street, Alexandria, Virginia 22314, by
appointment weekdays between 9 a.m. and 3 p.m. To make an appointment,
call (703) 518-6546 or send an email to OGCMail@ncua.gov.

FOR FURTHER INFORMATION CONTACT: Frank Kressman, Associate General
Counsel, or Pamela Yu, Staff Attorney, Office of General Counsel, at
the above address or telephone (703) 518-6593.

SUPPLEMENTARY INFORMATION:

I. Background
II. Summary of the Proposed Rule
III. Regulatory Procedures

I. Background

A. What is a low-income credit union?

Under Sec. 701.34 of NCUA's regulations, a low income credit union
(LICU) is an FCU designated as such because a majority of its
membership consists of ``low-income members,'' as defined by the NCUA
Board.\1\ Currently, the NCUA Board defines ``low-income members'' as
those members whose family income is 80% or less than the total median
earnings for individuals for the metropolitan area where they live or
national metropolitan area, whichever is greater.\2\
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\1\ 12 CFR 701.34. A state-chartered credit union may obtain a
LICU designation from its state supervisory authority with
concurrence from NCUA. Benefits of the state LICU designation vary
by state, based on applicable state law.
\2\ For members living outside a metropolitan area, NCUA will
use the statewide or national, non-metropolitan area median family
income instead of the metropolitan area or national metropolitan
area median family income. 12 CFR 701.34(a)(2).
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B. What are the benefits of being designated a LICU?

The Federal Credit Union Act (Act) provides LICUs with certain
statutory relief and other benefits.\3\ Some of the benefits include:
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\3\ 12 U.S.C. 1752(5), 1757a(b)(2)(A), 1757a(c)(2)(B), 1772c-1.
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Exemption from the statutory cap on member business
lending;
Authorization to accept non-member deposits from any
source;
Authorization to accept secondary capital; and
Eligibility for assistance from the Community Development
Revolving Loan Fund.
All of these provisions help a LICU to better serve its members and
community.

II. Summary of the Proposed Rule

A. Why is NCUA proposing this rule?

Executive Order 13579 provides that independent agencies, including
NCUA, should consider if they can modify, streamline, expand, or repeal
existing rules to make their programs more effective and less
burdensome.\4\ Also, the NCUA Board has a policy of continually
reviewing its regulations to ``update, clarify and simplify existing
regulations and eliminate redundant and unnecessary provisions.'' \5\
To carry out this internal policy, NCUA identifies one-third of its
existing regulations for review each year and provides notice of this
review so the public may comment. In 2012, NCUA is reviewing its LICU
rule as part of this process.
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\4\ E.O. 13579 (July 11, 2011).
\5\ NCUA Interpretive Ruling and Policy Statement (IRPS) 87-2,
as amended by IRPS 03-2, Developing and Reviewing Government
Regulations.
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Relative to these goals, the NCUA Board intends to provide
regulatory relief to FCUs by improving the process for obtaining a LICU
designation. Specifically, the NCUA Board believes that extending the
timeframe in which a qualifying FCU may accept its LICU designation
from 30 days to 90 days will make it easier for an eligible FCU to
obtain its LICU designation, take advantage of the benefits afforded to
LICUs, and better serve its members and community.
Additionally, the NCUA Board proposes several minor, nonsubstantive
revisions to NCUA's insurance regulation. The technical corrections are
necessary to reflect current agency practice in this regard.

B. How would the proposed rule change the current rule?

Under the current rule, NCUA notifies an FCU that it qualifies for
LICU designation if, based on examination data, NCUA determines that a
majority of the FCU's membership are low-income members.\6\ Once an FCU
receives notification of its eligibility, it has 30 days to ``opt-in''
by providing written notice to NCUA that it wishes to receive the
designation.\7\
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\6\ 12 CFR 701.34(a)(1).
\7\ Id.
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The NCUA Board is aware that some FCUs believe that the LICU
designation process is burdensome in some cases. In particular, some
FCUs have stated that the 30-day timeframe to accept the LICU
designation is too short for some credit unions. For example, it may
take an FCU longer than 30 days to fully analyze if it wishes to accept
the LICU designation or to obtain any necessary approval from its board
of directors. Accordingly, the proposed rule would allow an FCU 90 days
from the date of receipt of NCUA notification to provide written notice
to NCUA that it wishes to receive the LICU designation. The NCUA Board
believes this extra time will ease the burden of responding.
NCUA plans to notify FCUs of their eligibility on a periodic basis.
An FCU that does not or is not able to respond to a particular NCUA
notification in a timely manner will have additional opportunities to
accept the designation in the future. Additionally, an FCU can
relinquish its LICU status at any time, for any reason, simply by
notifying NCUA in writing that it wishes to do so. While the NCUA Board
believes such designation is advantageous to eligible FCUs, it proposes
to make it just as easy to relinquish the designation as it is to
accept it. An FCU that accepts the designation only needs to accept it
once, after which NCUA will not send additional notifications.

[[Page 65141]]

The NCUA Board also proposes minor technical corrections to NCUA's
insurance regulation to update and conform it to current agency
practice.\8\ Previously, regional directors had the delegated authority
to designate FCUs as LICUs. Currently, NCUA's Office of Consumer
Protection has that delegated authority. The proposal would update and
amend Sec. 741.204 to remove references to ``regional directors,'' and
to replace those references with ``NCUA''.
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\8\ See 12 CFR 741.204.
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C. Does the proposed rule create any new burdens for credit unions?

The proposal does not create any new regulatory burdens for credit
unions. To the contrary, as mentioned above, the NCUA Board seeks to
provide regulatory relief to FCUs that qualify for LICU designation.
Similarly, the proposed changes to NCUA's insurance regulation are
minor, nonsubstantive, and merely technical in nature. The technical
amendments do not create any new or substantive requirements for credit
unions.

III. Regulatory Procedures

A. Regulatory Flexibility Act

The Regulatory Flexibility Act requires NCUA to prepare an analysis
to describe any significant economic impact a proposed rule may have on
a substantial number of small entities (primarily those under ten
million dollars in assets). This proposed rule would make
nonsubstantive technical amendments and extend regulatory relief to
FCUs. NCUA has determined and certifies that this proposed rule will
not have a significant economic impact on a substantial number of small
credit unions.

B. Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in
which an agency by rule creates a new paperwork burden on regulated
entities or modifies an existing burden.\9\ For purposes of the PRA, a
paperwork burden may take the form of either a reporting or a
recordkeeping requirement, both referred to as information collections.
As noted above, the proposed amendments would make minor technical
corrections and extend regulatory relief. The proposal would not impose
or modify paperwork burdens.
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\9\ 44 U.S.C. 3507(d); 5 CFR part 1320.
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C. Executive Order 13132

Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests.
NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the executive order to adhere to fundamental
federalism principles. This proposed rule would not have a substantial
direct effect on the states, on the relationship between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government. NCUA has
determined that this proposed rule does not constitute a policy that
has federalism implications for purposes of the executive order.

D. Assessment of Federal Regulations and Policies on Families

NCUA has determined that this proposed rule will not affect family
well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999, Public Law 105-277, 112
Stat. 2681 (1998).

E. Agency Regulatory Goal

NCUA's goal is to promulgate clear and understandable regulations
that impose minimal regulatory burden. We request your comments on
whether this proposed rule is understandable and minimally intrusive if
implemented as proposed.

List of Subjects

12 CFR Part 701

Credit, Credit unions, Reporting and recordkeeping requirements.

12 CFR Part 741

Credit, Credit unions, Reporting and recordkeeping requirements,
Share insurance.

By the National Credit Union Administration Board, on October
18, 2012.
Mary F. Rupp,
Secretary of the Board.

For the reasons stated above, NCUA proposes to amend 12 CFR parts
701 and 741 as follows:

PART 701--ORGANIZATION AND OPERATIONS OF FEDERAL CREDIT UNIONS

1. The authority citation for part 701 continues to read as
follows:

Authority: 12 U.S.C. 1752(5), 1757, 1765, 1766, 1781, 1782,
1787, 1789; Title V, Pub. L. 109-351, 120 Stat. 1966.

2. Revise Sec. 701.34(a)(1) to read as follows:

Sec. 701.34 Designation of low-income status; Acceptance of secondary
capital accounts by low-income designated credit unions.

(a) Designation of low-income status. (1) Based on data obtained
through examinations, NCUA will notify a federal credit union that it
qualifies for designation as a low-income credit union if a majority of
its membership qualifies as low-income members. A federal credit union
that wishes to receive the designation must notify NCUA in writing
within 90 days of receipt of any NCUA notifications.
* * * * *

PART 741--REQUIREMENTS FOR INSURANCE

3. The authority citation for part 741 continues to read as
follows:

Authority: 12 U.S.C. 1757, 1766(a), 1781-1790, and 1790d; 31
U.S.C. 3717.

Sec. 741.204 [Amended]

4. Amend Sec. 741.204 by:
a. Removing the words ``the appropriate regional director''
wherever they appear and adding in their place the word ``NCUA''.
b. Removing the words ``the NCUA Regional Director'' wherever they
appear and adding in their place the word ``NCUA''.
c. Removing the words ``the appropriate NCUA Regional Director''
wherever they appear and adding in their place the word ``NCUA''.
[FR Doc. 2012-26129 Filed 10-24-12; 8:45 am]
BILLING CODE 7535-01-P