[Federal Register Volume 79, Number 192 (Friday, October 3, 2014)]
[Rules and Regulations]
[Pages 59627-59630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-22715]
[[Page 59627]]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Parts 701, 706, and 790
RIN 3133-AE42
Unfair or Deceptive Acts or Practices; Technical Amendments
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final rule.
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SUMMARY: The Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank Act) repealed NCUA's rulemaking authority under the Federal
Trade Commission Act (FTC Act). As a result, the NCUA Board (Board) is
now repealing NCUA's regulations governing unfair or deceptive acts or
practices. The Board is also making a number of technical amendments to
other NCUA regulations to conform them to the agency's current central
and field office structures. Additionally, the Board is amending NCUA's
payday alternative loans regulation to replace all references to
``short-term, small amount loans'' and ``STS loans'' with corresponding
references to ``payday alternative loans'' and ``PAL loans.'' The
latter terms more accurately reflect the nature and purpose of this
loan product.
DATES: This final rule is effective on October 3, 2014.
FOR FURTHER INFORMATION CONTACT: Frank Kressman, Associate General
Counsel, Office of General Counsel, at 1775 Duke Street, Alexandria, VA
22314 or telephone: (703) 518-6540.
SUPPLEMENTARY INFORMATION:
I. Background and Purpose of the Final Rule
II. Regulatory Amendments
III. Regulatory Procedures
I. Background and Purpose of the Final Rule
Why is the NCUA Board issuing this rule?
Part 706
In 2010, President Obama signed into law the Dodd-Frank Act (Pub.
L. 111-203, 124 Stat. 1376 (2010)). The Dodd-Frank Act substantially
changed the federal legal framework with respect to consumer financial
protection regulation. Among the many changes, section 1092 of the
Dodd-Frank Act repealed NCUA's rulemaking authority under the FTC
Act.\1\ As a result, the Board is repealing NCUA's rules under part
706, titled ``Unfair or Deceptive Acts or Practices.''
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\1\ 15 U.S.C. 57a(f) as amended by the Dodd-Frank Act.
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Despite the repeal of part 706, NCUA still has supervisory and
enforcement authority regarding unfair or deceptive acts or
practices,\2\ which could include the practices previously addressed in
part 706. NCUA may determine that statutory violations exist if federal
credit unions engage in acts or practices that are prohibited by the
Dodd-Frank Act or the FTC Act. Such prohibited acts or practices may
include, but are not limited to:
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\2\ NCUA has authority to enforce section 5 of the FTC Act (15
U.S.C. 45), and sections 1031 and 1036 of the Dodd-Frank Act (12
U.S.C. 5531 and 5536), under the Federal Credit Union Act. See 12
U.S.C. 1786(e) and 1786(k)(2).
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Including confessions of judgment, waivers of exemptions,
wage assignments, or security interests on household goods in consumer
contracts;
Misrepresenting the nature or extent of cosigner
liability; and
Pyramiding late fees.
Agency Structure
In November 2013, the Board approved a restructuring of NCUA's
central office. This restructuring consisted of transferring certain
functions from one office to another and establishing the Office of
Continuity and Security Management (OCSM). OCSM performs all security-
related functions that were formerly the responsibility of several
different offices. The core functions of OCSM are national continuity
programs, emergency management and physical security, personnel
security, and intelligence and information security. As a result of
this and other organizational changes described in section II, the
Board is making a number of conforming technical amendments to NCUA's
regulations.
Payday Alternative Loans
In September 2010, the Board amended its general lending regulation
to enable federal credit unions (FCUs) to offer payday alternative
loans (PAL loans).\3\ PAL loans serve as a viable alternative to
predatory payday loans and can help members break free of their
dependency on high-cost predatory payday loans. The Board encourages
FCUs to make PAL loans available for their members who need them,
provided they are offered in a safe and sound manner. To be more
readily understood, NCUA is amending the current terminology used to
describe this type of loan. Specifically, Sec. 701.21 currently refers
to these loans as ``short-term, small amount loans'' or ``STS loans.''
The Board believes that replacing that terminology with ``payday
alternative loans'' or ``PAL loans'' more accurately reflects the
nature and purpose of this loan product. The updated terminology also
is more consistent with the way NCUA and some industry stakeholders
currently refer to this loan product. This important loan product
deserves nomenclature that more precisely describes its function and is
more readily understood.
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\3\ 75 FR 58285 (Sept. 24, 2010).
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II. Regulatory Amendments
1. Part 706--Unfair or Deceptive Acts or Practices
As discussed above, in response to changes made by the Dodd-Frank
Act, this final rule repeals 12 CFR part 706.
2. Part 790--Changes to NCUA's Central and Field Office Structure
As discussed above, the Board is amending part 790 of NCUA's
regulations to conform it to NCUA's current central and field office
structures.
Office of Continuity and Security Management
The Office of Continuity and Security Management (OCSM), created in
November 2013, began operating in January 2014. It was created to
aggregate all of the agency's security-related functions into one
office. The primary consolidated functions are continuity of operations
planning, physical security, and personnel security. Also, NCUA put in
place an additional security function to address national security
issues affecting the financial services industry. All federal agencies
are required to comply with various statutes and Executive Orders
related to the safeguarding of national assets. Through OCSM, NCUA will
be able to more efficiently respond to these federal mandates and
conduct its security-related functions.
The final rule amends Part 790 to add a new paragraph describing
OCSM and its functions.
Office of the Chief Financial Officer
The final rule amends the description of the Office of Chief
Financial Officer to add strategic planning as one of its duties. NCUA
shifted this duty from another office to better utilize staffing
resources.
Office of Consumer Protection
The final rule amends the description of the Office of Consumer
Protection (OCP) to reflect that the office now has four divisions. The
Board added two divisions within OCP to more efficiently
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balance and structure the office's workload. In addition, NCUA deleted
the duties of the Ombudsman from OCP's description. The Executive
Director's office now supervises the Ombudsman.
Office of the Executive Director
The Board established the Ombudsman position in April 1995, as
required by the Riegle Community Development and Regulatory Improvement
Act of 1994. The Ombudsman operates as an objective third party to
resolve disputes that cannot be resolved at the operational level. In
2013, the Board elevated the position of the Ombudsman to the Executive
Director's office. It is supervised by the Executive Director's office
and reports directly to the Board. Previously, OCP oversaw the
Ombudsman's duties, and the Ombudsman reported to the Director of OCP.
Regional Offices
NCUA realigned its regional offices effective January 1, 2014. This
was designed to create geographically compact districts that balance
workload, improve efficiency, and reduce travel costs. In addition, the
new regional structure coincides with other changes to strengthen
NCUA's supervision, such as the creation of the Office of National
Examinations and Supervision. Each NCUA region now has approximately an
equal number of examiners, in addition to supervision, special actions,
and support personnel.
The Board is updating the table in Sec. 790.2(c)(1)(i), indicating
the states that each region is responsible for supervising. Nine states
have been transferred among the NCUA regional offices for the reasons
noted above.\4\ The changes are as follows:
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\4\ http://www.ncua.gov/about/Leadership/Pages/field-program-offices.aspx. This map shows the current regional alignment.
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Wisconsin is in Region I;
Ohio is in Region II;
Arkansas and Louisiana are in Region III;
Colorado, Montana, New Mexico, and Wyoming are in Region
IV and
California is in Region V.
Lastly, the territory of American Samoa is no longer listed in
Sec. 790.2(c)(1)(i) as NCUA no longer supervises any credit unions in
that jurisdiction.
3. Part 701--Payday Alternative Loans
As discussed above, the Board is amending NCUA's payday alternative
loans regulation to replace the terms ``short-term, small amount
loans'' and ``STS loans'' with the terms ``payday alternative loans''
and ``PAL loans'' to more accurately reflect the nature and purpose of
this loan product and to make it more readily understood.
III. Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act requires NCUA to prepare an analysis
to describe any significant economic impact a rule may have on a
substantial number of small entities (primarily those under $50 million
in assets).\5\ This final rule only makes non-substantive, technical
changes. NCUA certifies that these technical amendments will not have a
significant economic impact on a substantial number of small credit
unions.
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\5\ 5 U.S.C. 603(a).
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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.\6\ 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.
NCUA has determined that the technical amendments in this final rule do
not increase the paperwork requirements under PRA or regulations of the
Office of Management and Budget.
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\6\ 44 U.S.C. 3507(d); 5 CFR part 1320.
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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 final rule will 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 final rule does not constitute a policy that has
federalism implications for purposes of the executive order.
Assessment of Federal Regulations and Policies on Families
NCUA has determined that this final rule will not affect family
well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999.\7\
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\7\ Public Law 105-277, 112 Stat. 2681 (1998).
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Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996 \8\
(SBREFA) provides generally for congressional review of agency rules. A
reporting requirement is triggered in instances where NCUA issues a
final rule as defined by Section 551 of the Administrative Procedure
Act (APA).\9\ NCUA has submitted this rule to the Office of Management
and Budget for it to determine if the final rule is a ``major rule''
for purposes of SBREFA. NCUA does not believe the rule is major.
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\8\ Public Law 104-121, 110 Stat. 857 (1996).
\9\ 5 U.S.C. 551.
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Final Rule
Generally, the APA requires a federal agency to provide the public
with notice and the opportunity to comment on agency rulemakings. The
amendments in this rule are non-substantive and technical, or involve
only matters relating to management and personnel and are exempt from
APA notice and comment requirements.\10\ They reflect changes to NCUA's
organizational structure, remove duplicative and imprecise language,
make minor changes updating cross citations, and make minor changes
which are statutorily required by the Dodd-Frank Act. The APA permits
an agency to forego the notice and comment period under certain
circumstances, such as when a rulemaking is technical and non-
substantive. NCUA finds that, in this instance, notice and public
comment are unnecessary under section 553(b)(3)(B) of the APA.\11\ NCUA
also finds good cause to dispense with the 30-day delayed effective
date requirement under section 553(d)(3) of the APA.\12\ The rule,
therefore, will be effective immediately upon publication.
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\10\ 5 U.S.C. 553(a)(2) and 553(b)(3)(B).
\11\ 5 U.S.C. 553(b)(3)(B).
\12\ 5 U.S.C. 553(d)(3).
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List of Subjects
12 CFR Part 701
Credit, Credit unions, Reporting and recordkeeping requirements.
12 CFR Part 706
Consumer protection, Credit, Credit unions, Deception,
Intergovernmental relations, Trade practices, Unfairness.
12 CFR Part 790
Organization and functions (Government agencies).
[[Page 59629]]
By the National Credit Union Administration Board on September
18, 2014.
Gerard Poliquin,
Secretary of the Board.
For the reasons discussed above, the NCUA Board amends 12 CFR parts
701, 706, and 790 as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
0
1. The authority citation for part 701 continues to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759,
1761a, 1761b, 1766, 1767, 1782, 1784, 1786, 1787, 1789. Section
701.31 is also authorized by 15 U.S.C. 1601, et seq., 42 U.S.C. 1981
and 3601-3610. Section 701.35 is also authorized by 12 U.S.C. 4311-
4312.
0
2. Amend Sec. 701.21(c)(7)(iii) as follows:
0
a. Remove the words ``Short-term, small amount'' wherever they appear
and add, in their place, the words ``Payday alternative''.
0
b. Remove the words ``short-term, small amount'' wherever they appear
and add, in their place, the words ``payday alternative''.
0
c. Remove the words ``an STS'' wherever they appear and add, in their
place, the words ``a PAL''.
0
d. Remove the term ``STS'' wherever it appears and add, in its place,
the term ``PAL''.
PART 706--[REMOVED]
0
3. Under the authority of 12 U.S.C. 1751 et seq., part 706 is removed
and reserved.
PART 790--DESCRIPTION OF NCUA; REQUESTS FOR AGENCY ACTION
0
4. The authority citation for part 790 continues to read as follows:
Authority: 12 U.S.C. 1766, 1789, 1795f.
0
5. Amend Sec. 790.2 by:
0
a. Revising paragraphs (b)(4), (b)(6), and (b)(15);
0
b. Adding paragraph (b)(17); and
0
c. Revising paragraph (c)(1)(i).
The revisions and addition read as follows:
Sec. 790.2 Central and field office organization.
* * * * *
(b) * * *
(4) The Office of the Chief Financial Officer. NCUA's Chief
Financial Officer plans, organizes, implements, directs, and provides
overall direction and leadership for:
(i) Agency-wide strategic planning, budget formulation, and
performance reporting;
(ii) The agency's financial management system and financial
reporting functions;
(iii) Procurement and facilities management to include various
administrative responsibilities such as property management, mail
services, graphics support, supply management, printing, and
publications management; and
(iv) Managing the operations of the Operating and Insurance Funds,
including payroll, travel policies, revenue assessment, and dividend
distributions.
* * * * *
(6) Office of the Executive Director. The Executive Director
reports to the entire NCUA Board. The Executive Director translates
NCUA Board policy decisions into workable programs, delegates
responsibility for these programs to appropriate staff members, and
coordinates the activities of the senior executive staff, which
includes: the General Counsel; the Regional Directors; and the Office
Directors for Chief Financial Officer, Examination and Insurance, Human
Resources, Chief Information Officer, and Public and Congressional
Affairs. Because of the nature of the attorney/client relationship
between the Board and General Counsel, the General Counsel may be
directed by the Board not to disclose discussions and/or assignments
with anyone, including the Executive Director. The Executive Director
is otherwise to be privy to all matters within senior executive staff's
responsibility. The Executive Director also serves as the agency's
Director of Equal Employment Opportunity. The Office of the Executive
Director also supervises the agency's ombudsman. The ombudsman
investigates complaints and recommends solutions on regulatory issues
that cannot be resolved at the regional level.
* * * * *
(15) Office of Consumer Protection. (i) The Office of Consumer
Protection contains four divisions:
(A) The Division of Consumer Compliance Policy and Outreach;
(B) The Division of Consumer Affairs;
(C) The Division of Consumer Access; and
(D) The Division of Consumer Access-South.
(ii) The office provides consumer services, including consumer
education and complaint resolution; establishes, consolidates, and
coordinates consumer protections within the agency; acts as the central
liaison on consumer protection with other federal agencies; and
nationalizes field of membership processing and chartering activities.
* * * * *
(17) The Office of Continuity and Security Management. The Director
of the Office of Continuity and Security Management is responsible for
NCUA's emergency preparedness and for coordinating the response to
natural disasters or national security events; for timely dissemination
of information on cyber threats, terrorism, foreign criminal activity,
and other national security threats to the agency or to the credit
union sector; and for conducting risk assessments and managing
executive branch programs to protect NCUA personnel and facilities, and
to safeguard classified national security information.
(c) * * *
(1) Regional Offices. (i) The NCUA has five Regional Offices:
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Region No. Area within region Office address
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I............... Connecticut, Maine, 9 Washington Square,
Massachusetts, Michigan, Washington Avenue
New Hampshire, New York, Extension, Albany, NY
Rhode Island, Vermont, 12205-5512.
Wisconsin.
II.............. Delaware, District of 1900 Duke St., Suite 300,
Columbia, Maryland, New Alexandria, VA 22314-
Jersey, Ohio, 3498.
Pennsylvania, Virginia,
West Virginia.
III............. Alabama, Arkansas, 7000 Central Parkway,
Florida, Georgia, Suite 1600, Atlanta, GA
Indiana, Kentucky, 30328-4598.
Louisiana, Mississippi,
North Carolina, Puerto
Rico, South Carolina,
Tennessee, Virgin Islands.
IV.............. Colorado, Illinois, Iowa, 4807 Spicewood Springs
Kansas, Minnesota, Road, Suite 5200, Austin,
Missouri, Montana, TX 78759-8490.
Nebraska, New Mexico,
North Dakota, Oklahoma,
South Dakota, Texas,
Wyoming.
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V............... Alaska, Arizona, 1230 W. Washington Street,
California, Guam, Hawaii, Suite 301, Tempe, AZ
Idaho, Nevada, Oregon, 85281.
Utah, Washington.
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[FR Doc. 2014-22715 Filed 10-2-14; 8:45 am]
BILLING CODE 7535-01-P