[Federal Register Volume 78, Number 13 (Friday, January 18, 2013)]
[Rules and Regulations]
[Pages 4030-4032]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-00859]



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: Final rule.


SUMMARY: The NCUA Board (Board) is amending its low-income credit 
unions regulation by extending the time period in which a federal 
credit union (FCU) may accept a low-income designation. Under the 
current rule, an FCU that receives notice from NCUA of its

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eligibility for a low-income designation has 30 days to notify NCUA in 
writing that it wishes to accept the designation. The final rule 
extends an FCU's response time from 30 days to 90 days to make certain 
an FCU has adequate time to respond. The final rule also makes minor, 
nonsubstantive technical amendments to NCUA's requirements for 
insurance regulation to reflect current agency practice.

DATES: This rule is effective February 19, 2013.

FOR FURTHER INFORMATION CONTACT: Frank Kressman, Associate General 
Counsel, or Pamela Yu, Staff Attorney, Office of General Counsel, 
National Credit Union Administration, 1775 Duke Street, Alexandria, 
Virginia 22314-3428 or telephone (703) 518-6593.


I. Background and Proposal
II. Final Rule
III. Regulatory Procedures

I. Background and Proposal

A. What is a low-income credit union?

    An FCU qualifies as a low-income credit union (LICU) under NCUA's 
regulations if a majority of its membership consists of ``low-income 
members,'' as defined by the Board.\1\ Currently, the 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 provides LICUs with statutory relief 
and other benefits.\3\ Examples of such relief and 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 loans;
     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 benefits help a LICU better serve its members and 

C. October 2012 Proposal

    Executive Order 13579 provides that independent agencies, including 
NCUA, should consider if they can modify, streamline, expand, or repeal 
existing regulations to make their programs more effective and less 
burdensome.\4\ Additionally, the 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. NCUA reviewed the 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 

    In October 2012, the Board proposed amendments to the LICU rule.\6\ 
The Board was aware that some FCUs believed the LICU designation 
process was too burdensome in some cases. In particular, FCUs have 
stated that the requirement that an FCU accept the LICU designation 
within 30 days of having received notice of its eligibility from NCUA 
is too short for some FCUs. For example, they noted that it may take an 
FCU longer than 30 days to fully analyze if it wishes to accept the 
LICU designation or to obtain approval from its board of directors. 
Accordingly, the October 2012 proposal extended the acceptance time 
period from 30 days to 90 days. The Board believes that extending the 
timeframe to 90 days will make it easier for an eligible FCU to accept 
the LICU designation, take advantage of the benefits afforded to LICUs, 
and better serve its members and community. Overall, the proposal 
provided regulatory relief to FCUs and improved the LICU designation 

    \6\ 77 FR 65139 (Oct. 25, 2012).

    Additionally, the proposal made several minor, nonsubstantive 
revisions to NCUA's requirements for insurance regulation. These 
technical corrections are necessary to reflect current agency practice.

II. Final Rule

A. Summary of Comments on the October 2012 Proposal

    NCUA received 5 comments on the October 2012 proposal. The comments 
were universally positive, and all commenters supported extending the 
acceptance time period to 90 days. Several commenters also noted the 
extended time period will allow an FCU sufficient time to determine if 
the designation fits with its strategic plans.
    In addition, four commenters urged NCUA to further clarify the 
process for designating state-chartered, low-income credit unions as 
LICUs and to work with state regulators to ensure the state designation 
process is comparable to the federal process. The Board agrees that 
working with state regulators in this regard is worthwhile and would 
benefit state-chartered credit unions and their members.

B. Why is the Board adopting this rule?

    The Board is adopting the October 2012 proposed rule as a final 
rule without change for the same reasons it issued the October 2012 
proposed rule. In short, the final rule provides FCUs with regulatory 
relief and improves the LICU designation process by giving eligible 
FCUs sufficient time to: (1) Evaluate the benefits of having the 
designation; (2) determine if having the designation is consistent with 
their strategic plans; and (3) obtain FCU board of directors' approval. 
The final rule also enables more eligible FCUs to accept the LICU 
designation to better serve their members and communities. The proposed 
and final rules are fully supported by those who commented.
    The Board is also adopting minor, nonsubstantive technical 
corrections to NCUA's requirements for insurance regulation to update 
and conform it to current agency practice. Previously, regional 
directors had the delegated authority to designate FCUs as LICUs. 
Currently, NCUA's Office of Consumer Protection has that delegated 
authority. This final rule updates and amends Sec.  741.204 to remove 
references to regional directors.\7\

    \7\ 12 CFR 741.204.

    The Board reiterates that 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 may relinquish its LICU status at any time, for 
any reason, simply by notifying NCUA in writing that it wishes to do 
so. While the Board believes the LICU designation is advantageous to 
eligible FCUs, it notes that it is 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 

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C. Does the final rule create any new burdens for credit unions?

    No, neither the October 2012 proposal nor this final rule creates 
any new regulatory burdens for FCUs. To the contrary, as mentioned 
above, the Board is providing regulatory relief to FCUs that qualify 
for the LICU designation.

III. Regulatory Procedures

A. 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 ten million 
dollars in assets). This final rule makes nonsubstantive, technical 
amendments and extends regulatory relief to FCUs. NCUA has determined 
and certifies that this final 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.\8\ 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 amendments make minor, technical corrections and 
extend regulatory relief. The final rule does not impose or modify 
paperwork burdens.

    \8\ 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 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.

D. 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.\9\

    \9\ Public Law 105-277, 112 Stat. 2681 (1998).

 E. Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 \10\ 
(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.\11\ NCUA does not believe this final rule is a ``major rule'' 
within the meaning of the relevant sections of SBREFA. NCUA has 
submitted the rule to the Office of Management and Budget for its 
determination in that regard.

    \10\ Public Law 104-121, 110 Stat. 857 (1996).
    \11\ 5 U.S.C. 551.

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 January 10, 
Mary F. Rupp,
Secretary of the Board.

    For the reasons stated in the preamble, the National Credit Union 
Administration amends 12 CFR parts 701 and 741 as set forth below:


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.
* * * * *


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'' in 
paragraph (b) 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. 2013-00859 Filed 1-17-13; 8:45 am]