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



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.


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.


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\

    \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).

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:

    \3\ 12 U.S.C. 1752(5), 1757a(b)(2)(A), 1757a(c)(2)(B), 1772c-1.

     Exemption from the statutory cap on member business 
     Authorization to accept non-member deposits from any 
     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 

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.

    \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 

    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 

    \6\ 12 CFR 701.34(a)(1).
    \7\ Id.

    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''.

    \8\ See 12 CFR 741.204.

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 

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.

    \9\ 44 U.S.C. 3507(d); 5 CFR part 1320.

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:


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

    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.
* * * * *


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

    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]