Credit unions: Organization and operations Charitable contributions and donations; incorporation of agency policy,
[Federal Register: October 29, 1998 (Volume 63, Number 209)]
[Proposed Rules]
[Page 57942-57943]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29oc98-16]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
Organization and Operations of Federal Credit Unions
AGENCY: National Credit Union Administration (NCUA).
ACTION: Notice of proposed rulemaking and request for comments.
SUMMARY: The NCUA is proposing to incorporate into its regulations the agency's longstanding interpretation that federal credit unions (FCUs) are authorized, within limits, to make charitable contributions and donations. NCUA seeks to increase regulatory effectiveness by making it easier for FCUs to locate applicable rules regarding the making of charitable contributions and donations. NCUA seeks to increase regulatory effectiveness by making it easier for FCUs to locate applicable rules regarding the making of charitable contributions and donations.
DATES: Comments must be received on or before January 27, 1999.
ADDRESSES: Direct comments to Becky Baker, Secretary of the Board. Mail or hand-deliver comments to: National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428. Fax comments to (703) 518-6319. Please send comments by one method only.
FOR FURTHER INFORMATION CONTACT: Frank S. Kressman, Staff Attorney, Division of Operations, Office of General Counsel, at the above address or telephone:
(703) 518-6540.
SUPPLEMENTARY INFORMATION:
NCUA has a policy of continually reviewing its regulations to ``update, clarify and simplify existing regulations and eliminate redundant and unnecessary provisions.'' Interpretive Rulings and Policy Statements (IRPS) 87-2, Developing and Reviewing Government Regulations. As part of this regulatory review program, NCUA also reviews its IRPS to determine their current effectiveness.
NCUA issued IRPS 79-6 to clarify its position on FCUs making charitable contributions and donations. 44 FR 56691 (October 2, 1979). In IRPS 79-6, NCUA acknowledged the benefits associated with FCUs making charitable contributions and donations. Also, NCUA stated that the making of charitable contributions and donations is an activity incidental to an FCU's business within the scope of powers set forth in the Federal Credit Union Act. 12 U.S.C. 1757(17).
As a result of the review of IRPS 79-6, NCUA seeks to increase regulatory effectiveness by making it easier for FCUs to locate applicable rules regarding the making of charitable contributions and donations. Accordingly, NCUA is proposing to add a new Sec. 701.25 that will incorporate the policies of IRPS 79-6 into NCUA regulations. This new rule will be located in part 701 so it will be in the same place as other regulatory provisions regarding the organization and operations of FCUs. The language of the new rule is somewhat different from that of the IRPS, but the rationale and limitations are the same.
This proposal addresses charitable contributions and donations only and does not include political contributions and donations of FCUs, which are governed by the Federal Election Campaign Act (2 U.S.C. 441b). Additionally, all charitable contributions and donations by FCUs must be made in accordance with applicable Federal Credit Union Bylaws including those addressing conflicts of interest and FCU board of directors meetings. FCU Bylaws Art. XIX, Sec. 4 and Art. VIII, Sec. 8. Finally, NCUA intends that an FCU's board of directors, if it chooses, can establish a budget for charitable contributions and donations and authorize an executive committee of directors or appropriate FCU senior officials to disburse those funds in accordance with the proposal.
Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact any proposed regulation may have on a substantial number of small entities (primarily those under $1 million in assets). The NCUA has determined and certifies that the proposed amendment, if adopted, will not have a significant economic impact on a substantial number of small credit unions. Accordingly, the NCUA has determined that a Regulatory Flexibility Analysis is not required.
Paperwork Reduction Act
NCUA has determined that the proposed amendments do not increase paperwork requirements under the Paperwork Reduction Act of 1995 and regulations of the Office of Management and Budget. .
Executive Order 12612
Executive Order 12612 requires NCUA to consider the effect of its actions on state interests. The proposal only applies to federal credit unions. NCUA has determined that the proposed amendment does not constitute a significant regulatory action for purposes of Executive Order 12612.
List of Subjects in 12 CFR Part 701
Charitable contributions, Credit unions.
By the National Credit Union Administration Board on October 22, 1998. Becky Baker, Secretary of the Board.
For the reasons set forth in the preamble, it is proposed that 12 CFR part 701 be amended as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
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The authority citation for part 701 continues to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1759, 1761a, 1761b, 1766, 1767, 1782, 1784, 1787, and 1789. Section 701.6 is also authorized by 31 U.S.C. 3717. Section 701.31 is also authorized by 15 U.S.C. 1601 et seq., 42 U.S.C. 1861 and 42 U.S.C. 3601-3610. Section 701.35 is also authorized by 42 U.S.C. 4311-4312.
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Part 701 is amended by adding Sec. 701.25 to read as follows:
Sec. 701.25 Charitable contributions and donations.
(a) A federal credit union may make charitable contributions and/or donate funds only to:
(1) An organization that is a tax exempt organization under Section 501(c)(3) of the Internal Revenue Code and is located in or conducts its activities in a community in which the federal credit union has a principal place of business; or
(2) An organization that is a tax exempt organization under Section 501(c)(3) of the Internal Revenue Code
[[Page 57943]]
and operates primarily to promote and develop credit unions.
(b) The board of directors must approve charitable contributions and/or donations, and the approval must be based on a determination by the board of directors that the contributions and/or donations are in the best interests of the credit union and are reasonable given the financial condition of the credit union.
[FR Doc. 98-28878Filed10-28-98; 8:45 am]
BILLING CODE 7535-01-U
