[Federal Register Volume 74, Number 42 (Thursday, March 5, 2009)]
[Proposed Rules]
[Pages 9573-9574]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-4575]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 74, No. 42 / Thursday, March 5, 2009 /
Proposed Rules
[[Page 9573]]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
RIN 3133-AD60
Operating Fees
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
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SUMMARY: NCUA proposes to amend its rule on the assessment of the
federal credit union (FCU) operating fee to exclude investments made
under the Credit Union System Investment Program (CU SIP) and the
Credit Union Homeowners Affordability Relief Program (CU HARP) from the
calculation of total assets; total assets is the basis on which the
operating fee is currently calculated. The Board believes this
amendment will remove a disincentive for some FCUs from participating
in the CU SIP or the CU HARP.
DATES: Comments must be received on or before May 4, 2009.
ADDRESSES: You may submit comments by any of the following methods
(Please send comments by one method only):
NCUA Web Site: http://www.ncua.gov/news/proposed_regs/proposed_regs.html. Follow the instructions for submitting comments.
E-mail: Address to [email protected]. Include ``[Your
name] Comments on Notice of Proposed Rulemaking (Operating Fee)'' in
the e-mail subject line.
Fax: (703) 518-6319. Use the subject line described above
for e-mail.
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: All public comments are available on the
agency's Web site at http://www.ncua.gov/RegulationsOpinionsLaws/comments 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 a.m. and 3 p.m. To make an appointment,
call (703) 518-6546 or send an e-mail to [email protected].
FOR FURTHER INFORMATION CONTACT: Justin M. Anderson, Staff Attorney,
Office of General Counsel, at the above address or telephone (703) 518-
6540.
SUPPLEMENTARY INFORMATION:
A. Background
Section 1755 of the Federal Credit Union Act (the Act) requires
FCUs to pay an annual operating fee to NCUA. 12 U.S.C. 1755(a). This
section of the Act provides the NCUA Board (the Board) with broad
discretion in deciding how the amount of the operating fee is
determined. Specifically, this section states:
The fee assessed under this section shall be determined
according to a schedule, or schedules, or other method determined by
the Board to be appropriate, which gives due consideration to the
expenses of the Administration in carrying out its responsibilities
under this Act and to the ability of Federal credit unions to pay
the fee.
12 U.S.C. 1755(b).
Currently, Sec. 701.6 sets out the basis on which NCUA assesses
the operating fee. Briefly summarized, this section provides that FCUs
must pay NCUA an annual operating fee based on the credit union's total
assets. 12 CFR 701.6(a). NCUA calculates an FCU's operating fee by
multiplying the dollar amount of the total assets by a percentage set
by the Board after considering the expenses of NCUA and the ability of
FCUs to pay the fee. The term ``total assets'' generally includes all
assets created on an FCU's books related to investments made by an FCU
that are currently outstanding as of the close of the previous fiscal
year. Based on this calculation, an increase in the dollar amount of
investments will increase total assets and, thereby, may increase an
FCU's operating fee. The Board recognizes that an FCU making
investments under the CU SIP or the CU HARP may be subject to a higher
operating fee and this may act as a disincentive for FCU participation
in the programs.
B. CU SIP and CU HARP
On December 9, 2008, after receiving concurrences from the Federal
Reserve Board and the Secretary of the Treasury, the NCUA Board
announced two, new initiatives for Central Liquidity Facility (CLF)
extensions of credit to credit unions for system liquidity needs. The
two initiatives were the CU SIP and the CU HARP.
Under the CU SIP, participating credit unions can borrow from the
CLF and invest the proceeds in participating corporate credit unions.
Specifically, the CLF will make a secured, one-year advance to the
credit union, which it must, in turn, concurrently invest in a fixed-
rate, matched term, guaranteed CU SIP Note issued by a participating
corporate credit union. As of February 10, 2009, the CLF has dispersed
over seven billion dollars under the CU SIP.
The CU HARP is a two-year, $2 billion program intended to assist
homeowners who are facing delinquency, default, or foreclosure on their
mortgages, especially in the face of diminished home prices. Under the
CU HARP, participating creditworthy credit unions can borrow from the
CLF, and receive as much as an additional 100-basis point spread over
the cost of borrowing if they modify at-risk mortgages, primarily by
lowering interest rates and corresponding monthly payments. Under the
CU HARP, the CLF makes a secured, one year advance to the credit union,
which is renewable for a term of one year. The credit union must, in
turn, concurrently invest the proceeds in a two-year, guaranteed CU
HARP Note issued by a participating corporate credit union.
The Board recognizes the CU SIP and the CU HARP are valuable tools
to infuse liquidity into the corporate credit union system and support
the overall national economic interest. The Board, however, is
concerned that requiring FCU's to include CU SIP and CU HARP
investments in their total assets, for purposes of calculating their
operating fees, may deter participation in the programs. The Board,
therefore, is proposing to amend Sec. 701.6 to address the potential
disincentive FCUs may face when deciding to participate in the CU SIP
and CU HARP.
C. Proposed Amendment
The proposed rule would amend Sec. 701.6 by excluding investments
made
[[Page 9574]]
under the CU SIP and the CU HARP from an FCU's total assets for
purposes of calculating its operating fee. Specifically, the Board is
excluding, from the calculation of total assets, the asset that is
created on the books of a natural person federal credit union when it
makes a CU SIP or CU HARP related investment in a corporate credit
union. Under this proposed rule, participating FCUs would continue to
calculate their total assets in the same manner, except they would not
include the dollar amount of any outstanding CU SIP or CU HARP
investments in the calculation. This amendment would insure an increase
in operating fees would not deter FCUs from participating in the
programs. Because the operating fee is based on an FCU's total assets
as of the close of the previous fiscal year and funding for the CU SIP
and CU HARP took place after January 1, 2009, the amendments made in
this rule will not affect the computation of the operating fee until
2010.
Regulatory Procedures
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 credit unions (those under $10 million in
assets). This proposed rule revises the calculation of total assets for
purposes of the assessment of the FCU operating fee and would exclude
investments made under the CU SIP and the CU HARP from the calculation.
The operating fee is calculated as a percentage of total assets and, as
such, the calculation already is geared to impose a lesser fee on
smaller credit unions. In addition, the operating fee schedule has
historically imposed no operating fee on FCUs with assets up to
$500,000 and a flat fee of $100 for FCUs of up to $750,000 in assets.
The benefit of the proposed amendment would apply equally to small
credit unions, to the extent they participate in the CU SIP or the CU
HARP, and would not have a significant effect on their operating fees.
The proposed rule, therefore, will not have a significant economic
impact on a substantial number of small credit unions and a regulatory
flexibility analysis is not required.
Paperwork Reduction Act
NCUA has determined that the proposed amendments will not increase
paperwork requirements and a paperwork reduction analysis is not
required.
Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, NCUA, an independent
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies
with the executive order. The proposed rule would not have substantial
direct effects on the states, on the connection 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.
The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families
NCUA has determined that this proposed rule would 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).
List of Subjects in 12 CFR Part 701
Credit unions, Low income, Nonmember deposits, Secondary capital,
Shares.
By the National Credit Union Administration Board on February
26, 2009.
Mary Rupp,
Secretary of the Board.
For the reasons stated in the preamble, the National Credit Union
Administration proposes to amend 12 CFR part 701 as set forth below:
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), 1755, 1756, 1757, 1759, 1761a,
1761b, 766, 1767, 1782, 1784, 1787, 1789. Section 701.6 is also
authorized by 15 U.S.C. 3717. 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 42 U.S.C. 4311-4312.
2. In Sec. 701.6, add a new sentence to the end of paragraph (a)
to read as follows:
Sec. 701.6 Fees paid by Federal credit unions.
(a) * * * The term total assets does not include the assets created
on the books of a natural person federal credit union by investments
made in a corporate credit union under the Credit Union System
Investment Program or the Credit Union Homeowners Affordability Relief
Program.
* * * * *
[FR Doc. E9-4575 Filed 3-4-09; 8:45 am]
BILLING CODE 7535-01-P