[Federal Register Volume 79, Number 244 (Friday, December 19, 2014)]
[Proposed Rules]
[Pages 75763-75766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29629]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Chapter VII
Regulatory Publication and Review Under the Economic Growth and
Regulatory Paperwork Reduction Act of 1996
AGENCY: National Credit Union Administration.
ACTION: Notice of regulatory review; request for comments.
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SUMMARY: The NCUA Board (Board) is continuing its comprehensive review
of its regulations to identify outdated, unnecessary, or burdensome
regulatory requirements imposed on federally insured credit unions, as
contemplated by section 2222 of the Economic Growth and Regulatory
Paperwork Reduction Act of 1996 (EGRPRA). This second decennial review
of regulations began when the Board issued its first EGRPRA notice on
May 22, 2014, covering the two categories of ``Applications and
Reporting'' and ``Powers and Activities.'' \1\ Today, the Board
continues the review process with the publication of this second
notice, covering the next three categories of rules: ``Agency
Programs,'' ``Capital,'' and ``Consumer Protection.'' This review
presents a significant opportunity to consider the possibilities for
burden reduction in groups of similar regulations. The Board welcomes
comment on the categories, the order of review, and all other aspects
of this initiative in order to maximize the review's effectiveness.
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\1\ 79 FR 32121 (June 4, 2014).
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DATES: Comment must be received on or before March 19, 2015.
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 [email protected]. Include ``[Your
name] Comments on Regulatory Review pursuant to EGRPRA'' in the email
subject line.
Fax: (703) 518-6319. Use the subject line described above
for email.
Mail: Address to Gerard Poliquin, Secretary of the Board,
National Credit Union Administration, 1775 Duke Street, Alexandria,
Virginia 22314-3428.
Hand Delivery/Courier: Same as mail address.
Public Inspection: All public comments are available on the
agency's Web site at http://www.ncua.gov/Legal/Regs/Pages/PropRegs.aspx
as submitted, except as may not be possible for technical reasons.
Public comments will not be edited to remove any identifying or contact
information. Paper copies of comments may be inspected in NCUA's law
library at 1775 Duke Street, Alexandria, Virginia 22314, by appointment
weekdays between 9:00 a.m. and 3:00 p.m. To make an appointment, call
(703) 518-6546 or send an email to [email protected].
FOR FURTHER INFORMATION CONTACT: Ross P. Kendall, Special Counsel to
the General Counsel, at the above address, or telephone: (703) 518-
6562.
SUPPLEMENTARY INFORMATION:
I. Introduction
Congress enacted EGRPRA \2\ as part of an effort to minimize
unnecessary government regulation of financial institutions consistent
with safety and soundness, consumer protection, and other public policy
goals. Under EGRPRA, the appropriate federal banking agencies (Office
of the Comptroller of the Currency, Board of Governors of the Federal
Reserve System, and Federal Deposit Insurance Corporation; herein
Agencies \3\) and the Federal Financial Institutions Examination
Council (FFIEC) must review their regulations to identify outdated,
unnecessary, or unduly burdensome requirements imposed on insured
depository institutions. The Agencies are required, jointly or
individually, to categorize regulations by type, such as ``consumer
regulations'' or ``safety and soundness'' regulations. Once the
categories have been established, the Agencies must provide notice and
ask for public comment on one or more of these regulatory categories.
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\2\ Pub. L. 104-208, Div. A, Title II, section 2222, 110 Stat.
3009 (1996); codified at 12 U.S.C. 3311.
\3\ The Office of Thrift Supervision was still in existence at
the time EGRPRA was enacted and was included in the listing of
Agencies. Since that time, the OTS has been eliminated and its
responsibilities have passed to the Agencies and the Consumer
Financial Protection Bureau.
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NCUA is not technically required to participate in the EGRPRA
review process, since NCUA is not an ``appropriate Federal banking
agency'' as specified in EGRPRA. In keeping with the spirit of the law,
however, the Board has once again elected to participate in the review
process. Thus, NCUA has participated along with the Agencies in the
planning process, but has developed its own regulatory categories that
are comparable with those developed by the Agencies. Because of the
unique circumstances of federally insured credit unions and their
members, the Board is issuing a separate notice from the Agencies.
NCUA's notice is consistent and comparable with the Agencies' notice,
except on issues that are unique to credit unions.
In accordance with the objectives of EGRPRA, the Board asks the
public to identify areas of its regulations that are outdated,
unnecessary, or unduly burdensome. In addition to this second notice,
the Board will issue two more notices for comment during 2015, at
regular intervals. The EGRPRA review supplements and complements the
reviews of regulations that NCUA conducts under other laws and its
internal policies.\4\
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\4\ Interpretive Ruling and Policy Statement (IRPS) 87-2, 52 FR
35231 (Sept. 8, 1987) as amended by IRPS 03-2, 68 FR 32127 (May 29,
2003.) (Reflecting NCUA's commitment to ``periodically update,
clarify and simplify existing regulations and eliminate redundant
and unnecessary provisions.'')
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As the Board noted in its initial EGRPRA notice in May 2014, the
creation of the Consumer Financial Protection Bureau (CFPB) resulted in
the transfer to CFPB of responsibility for certain consumer protection
rules that had previously been the responsibility of the Agencies and/
or NCUA, such as Regulation Z and rules governing consumer privacy.
Because the CFPB is not covered by EGRPRA or required to participate in
this regulatory review process, the Agencies and NCUA have excluded
certain consumer protection regulations from the scope of the current
review.\5\ In the case of rules implementing specific aspects of the
Fair Credit Reporting Act, the Truth in Savings Act, rules pertaining
to fair lending in the housing area, and flood insurance, NCUA has
retained rule-writing authority. Therefore, these rules are retained
for purposes of the EGRPRA
[[Page 75764]]
review and comprise one of the categories for which comment is
currently being solicited. Rules pertaining to share insurance and
advertising also remain within NCUA's province and, therefore, are
included as well.
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\5\ In addition to rules that have been transferred to the CFPB,
insured credit unions are also subject to certain other regulations
that are not required to be reviewed under the EGRPRA process, such
as regulations issued by the Department of the Treasury's Financial
Crimes Enforcement Network. Any comment received during the EGRPRA
process that pertains to such a rule will be forwarded to the
appropriate agency.
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EGRPRA contemplates a two-part regulatory response. First, NCUA
will publish in the Federal Register a summary of the comments it
receives, identifying and discussing the significant issues raised.
Second, the law directs the Agencies to ``eliminate unnecessary
regulations to the extent that such action is appropriate.'' As was
done during the initial decennial review process, the Board anticipates
that it will prepare its response separately from the Agencies, but at
around the same time.
EGRPRA further requires the FFIEC to submit a report to the
Congress within 30 days after NCUA and the Agencies publish the comment
summary and analysis in the Federal Register. This report must
summarize any significant issues raised by the public comments and the
relative merits of those issues. The report also must analyze whether
the appropriate federal financial regulator involved is able to address
the regulatory burdens associated with the issues by regulation, or
whether the burdens must be addressed by legislation. The FFIEC report
submitted to Congress following the initial decennial EGRPRA review
included an Agency section discussing banking sector issues and a
separate section devoted to NCUA and credit union issues. It is likely
that the FFIEC will follow a similar approach in this second decennial
EGRPRA review and report process.
II. The EGRPRA Review's Special Focus
The regulatory review contemplated by EGRPRA provides a significant
opportunity for the public and the Board to consider groups of related
regulations and identify possibilities for streamlining. The EGRPRA
review's overall focus on the totality of regulations will offer a new
perspective in identifying opportunities to reduce regulatory burden.
For example, the EGRPRA review may facilitate the identification of
regulatory requirements that are no longer consistent with the way
business is conducted and that therefore might be eliminated. Of
course, reducing regulatory burden must be consistent with ensuring the
continued safety and soundness of federally insured credit unions and
appropriate consumer protections.
EGRPRA also recognizes that burden reduction must be consistent
with NCUA's statutory mandates, many of which currently require certain
regulations. One of the significant aspects of the EGRPRA review
program is the recognition that effective burden reduction in certain
areas may require legislative change. The Board will be soliciting
comment on, and reviewing the comments and regulations carefully for,
the relationship among burden reduction, regulatory requirements, and
statutory mandates. This will be a key aspect of the report to
Congress.
The Board views the approach of considering the relationship of
regulatory and statutory change on regulatory burden, in concert with
EGRPRA's provisions calling for grouping regulations by type, to
provide the potential for particularly effective burden reduction. The
Board believes the EGRPRA review can also significantly contribute to
its on-going efforts to reduce regulatory burden. Since 1987, a
formally adopted NCUA policy has required the Board to review each of
its regulations at least once every three years with a view toward
eliminating, simplifying, or otherwise easing the burden of each
regulation.\6\ Further, the Board addresses the issue of regulatory
burden every time it proposes and adopts a rule. NCUA complies with the
Paperwork Reduction Act of 1995 \7\ the Regulatory Flexibility Act \8\
and the Small Business Regulatory Enforcement Fairness Act of 1996 \9\
in connection with each rulemaking and evaluates the burdens the
rulemaking might impose on the industry, consistent with safety and
soundness and consumer protection considerations.
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\6\ IRPS 87-2, 52 FR 35231 (Sept. 8, 1987) as amended by IRPS
03-2, 68 FR 32127 (May 29, 2003).
\7\ 44 U.S.C. 3501 et seq.
\8\ 5 U.S.C. 601 et seq.
\9\ Pub. L. 104-121, 110 Stat 857 (1996).
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The Board is particularly sensitive to the impact of agency rules
on small institutions. In 2013, the Board formally increased the
threshold for meeting the ``small'' classification to having assets of
$50 million or less. The Board is cognizant that each new or amended
regulation has the potential for requiring significant expenditures of
time, effort, and money to achieve compliance, and also that this
burden can be particularly difficult for institutions of smaller asset
size, with fewer resources available.
III. The Board's Proposed Plan
EGRPRA contemplates the categorization of regulations by ``type.''
During the initial decennial review, the Board developed and published
for comment ten categories for NCUA's rules, including some that had
been issued jointly with the Agencies. The Board believes these initial
categories worked well for the purpose of presenting a framework for
the review and so has retained them for this second review.\10\ The
categories, in alphabetical order, are: Agency Programs; Applications
and Reporting; Capital; Consumer Protection; Corporate Credit Unions;
Directors, Officers and Employees; Money Laundering; Powers and
Activities; Rules of Procedure; and Safety and Soundness. As noted
above, some of the rules in the consumer protection category are now
under CFPB's jurisdiction and administration, and those affected rules
have been eliminated. Any rules adopted for the first time since 2006
have been included in the appropriate category.\11\ Rules still in
proposed form are not included in this review; commenters may be sure
that comments submitted directly in response to proposed rules will be
given due consideration within that process.
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\10\ Consistent with EGRPRA's focus on reducing burden on
insured credit unions, the Board has not included internal,
organizational or operational regulations in this review. These
regulations impose minimal, if any, burden on insured credit unions.
\11\ Commenters should note, in this respect, that for new
regulations that have only recently gone into effect, some passage
of time may be necessary before the burden associated with the
regulatory requirements can be fully and properly understood.
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As the Board noted during the initial decennial review, although
there are other possible ways of categorizing its rules, these ten
categories ``are logical groupings that are not so broad such that the
number of regulations presented in any one category would overwhelm
potential commenters. The categories also reflect recognized areas of
industry interest and specialization or are particularly critical to
the health of the credit union system.'' As was also noted during the
initial review, some regulations, such as lending, pertain to more than
one category and are included in all applicable categories.
The Board remains convinced that publishing its rules for public
comment separately from the Agencies is the most effective method for
achieving EGRPRA's burden reduction goals for federally insured credit
unions. Owing to differences in the credit union system as compared to
the banking system, there is not a direct, category by category,
correlation between NCUA's rules and those of the Agencies. For
example, credit unions deal with issues such as membership, credit
union service organizations, and corporate credit unions, all of which
are unique to credit union operations. Similarly,
[[Page 75765]]
certain categories identified by the Agencies have limited or no
applicability in the credit union sector, such as community
reinvestment, international operations, and securities. The categories
developed by the Board and the Agencies reflect these differences. The
Board intends to maintain comparability with the Agencies' notices to
the extent there is overlap or similarity in the issues and the
categories.
After the conclusion of the comment period for each EGRPRA notice
published in the Federal Register, the Board will review the comments
it has received and decide whether further action is appropriate with
respect to the categories of regulations included in that notice.
The Board has prepared two charts to assist public understanding of
the organization of its review. The first chart, set forth at Section
V.A. below, presents the three categories of regulations on which NCUA
is requesting burden reduction recommendations in this notice. The
three categories are shown in the left column. In the middle column are
the subject matters that fall within the categories and in the far
right column are the regulatory citations. The second chart, set forth
at Section V.B. below, presents the remaining five categories in
alphabetical order in a similar format.
IV. Request for Burden Reduction Recommendations for the Categories of
Regulations: ``Agency Programs,'' ``Capital,'' and ``Consumer
Protection''
The Board seeks public comment on regulations within the following
three categories--``Agency Programs,'' ``Capital,'' and ``Consumer
Protection''--that may impose outdated, unnecessary, or unduly
burdensome regulatory requirements on federally insured credit unions.
Comments that cite particular provisions or language, and provide
reasons why such provisions should be changed, would be most helpful to
NCUA's review efforts. Suggested alternative provisions or language,
where appropriate, would also be helpful. If the implementation of a
comment would require modifying a statute that underlies the
regulation, the comment should, if possible, identify the needed
statutory change.
Specific issues for commenters to consider. While all comments
related to any aspect of the EGRPRA review are welcome, the Board
specifically invites comment on the following issues:
Need and purpose of the regulations. Do the regulations in
these categories fulfill current needs? Has industry or other
circumstances changed since a regulation was written such that the
regulation is no longer necessary? Have there been shifts within the
industry or consumer actions that suggest a re-focus of the underlying
regulations?
Do any of the regulations in these categories impose burdens not
required by their authorizing statutes?
Need for statutory change. Do the statutes impose
unnecessary requirements? Are any of the statutory requirements
underlying these categories redundant, conflicting or otherwise unduly
burdensome? If so, how should the statutes be amended?
Overarching approaches/flexibility of the regulatory
standards. Generally, is there a different approach to regulating that
the Board could use that would achieve statutory goals while imposing
less burden? Do any of the regulations in these categories or the
statutes underlying them impose unnecessarily inflexible requirements?
Effect of the regulations on competition. Do any of the
regulations in these categories or the statutes underlying them create
competitive disadvantages for credit unions compared to another part of
the financial services industry? If so, how should these regulations be
amended?
Reporting, recordkeeping and disclosure requirements. Do
any of the regulations in these categories or the statutes underlying
them impose particularly burdensome reporting, recordkeeping or
disclosure requirements? Are any of these requirements similar enough
in purpose and use so that they could be consolidated? What, if any, of
these requirements could be fulfilled electronically to reduce their
burden? Please provide specific recommendations.
Consistency and redundancy. Do any of the regulations in
these categories impose inconsistent or redundant regulatory
requirements that are not warranted by the circumstances?
Clarity. Are the regulations in these categories and the
underlying statutes drafted in clear and easily understood language?
Are there specific regulations or underlying statutes that need
clarification?
Scope of rules. Is the scope of each rule in these
categories consistent with the intent of the underlying statute(s)?
Could NCUA amend the scope of a rule to clarify its applicability or to
reduce the burden, while remaining faithful to statutory intent? If so,
specify which regulation(s) should be clarified.
Burden on small insured institutions. The Board has a
particular interest in minimizing burden on small insured credit unions
(those with less than $50 million in assets). NCUA solicits comment on
whether any regulations within these categories should be continued
without change, amended or rescinded in order to minimize any
significant economic impact the regulations may have on a substantial
number of small federally insured credit unions.
V. A. Regulations About Which Burden Reduction Recommendations Are
Requested Currently
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Agency Programs............... Community Development 12 CFR 705.
Revolving Loan
Program.
Central Liquidity 12 CFR 725.
Facility.
Designation of low- 12 CFR 701.34.
income status;
receipt of secondary
capital accounts by
low-income designated
credit unions.
Capital....................... Prompt corrective 12 CFR 702.
action.
Adequacy of reserves.. 12 CFR 741.3(a).
Consumer Protection........... Nondiscrimination 12 CFR 701.31.
requirement (Fair
Housing).
Truth in Savings (TIS) 12 CFR 707.
Loans in areas having 12 CFR 760.
special flood hazards.
Fair Credit 12 CFR 717,
Reporting_identity Subpart J.
theft red flags.
Fair Credit 12 CFR 717.83.
Reporting_disposal of
consumer information.
Fair Credit 12 CFR 717.82.
Reporting_duties
regarding address
discrepancies.
Share insurance....... 12 CFR 745.
Advertising........... 12 CFR 740.
Disclosure of share 12 CFR 741.10.
insurance.
Notice of termination 12 CFR 741.5.
of excess insurance
coverage.
Uninsured membership 12 CFR 741.9.
shares.
Member inspection of 12 CFR 701.3.
credit union books,
records, and minutes.
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V. B. Categories and Regulations About Which NCUA Will Seek Comment
Later
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Corporate Credit Unions....... Corporate credit 12 CFR 704.
unions.
Directors, Officers, and Loans and lines of 12 CFR
Employees. credit to officials. 701.21(d).
Reimbursement, 12 CFR 701.33.
insurance, and
indemnification of
officials and
employees.
Retirement benefits 12 CFR 701.19.
for employees.
Management officials 12 CFR 711.
interlock.
Fidelity bond and 12 CFR 713.
insurance coverage.
General authorities 12 CFR 701.4.
and duties of federal
credit union
directors.
Golden parachutes and 12 CFR 750.
indemnification
payments.
Money Laundering.............. Report of crimes or 12 CFR 748.1.
suspected crimes.
Bank Secrecy Act...... 12 CFR 748.2.
Rules of Procedure............ Liquidation 12 CFR 709 and
(involuntary and 710.
voluntary).
Uniform rules of 12 CFR 747,
practice and subpart A.
procedure.
Local rules of 12 CFR 747,
practice and subparts B-M
procedure.
Safety and Soundness.......... Lending............... 12 CFR 701.21.
Investments........... 12 CFR 703.
Supervisory committee 12 CFR 715.
audit.
Security programs..... 12 CFR 748.0.
Guidelines for 12 CFR 748,
safeguarding member Appendices A
information and and B.
responding to
unauthorized access
to member information.
Records preservation 12 CFR 749.
program and
appendices_record
retention;
catastrophic act
preparedness.
Appraisals............ 12 CFR 722.
Examination........... 12 CFR 741.1.
Liquidity and 12 CFR 741.12.
contingency funding
plans.
Regulations codified 12 CFR 741,
elsewhere in NCUA's subpart B.
regulations as
applying to federal
credit unions that
also apply to
federally insured
state-chartered
credit unions.
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By the National Credit Union Administration Board on December
11, 2014.
Gerard Poliquin,
Secretary of the Board.
[FR Doc. 2014-29629 Filed 12-18-14; 8:45 am]
BILLING CODE 7535-01-P