Regulatory Publication and Review Under the Economic Growth and Regulatory Paperwork Reduction Act of 1996
Federal Register, Volume 79 Issue 107 (Wednesday, June 4, 2014)
Federal Register Volume 79, Number 107 (Wednesday, June 4, 2014)
Proposed Rules
Pages 32191-32195
From the Federal Register Online via the Government Printing Office www.gpo.gov
FR Doc No: 2014-12739
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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SUMMARY: The NCUA Board (Board) is beginning its second, comprehensive review of its regulations to identify outdated, unnecessary, or burdensome regulatory requirements imposed on federally insured credit unions, as contemplated by section 2222 of the Economic Growth and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). In accordance with EGRPRA, the Board has categorized its regulations for the purpose of the review and proposes to publish categories of regulations for public comment at regular intervals over the next two years. The categories, and the regulations that the Board considers to be part of those categories, are detailed below. 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. In 2003, the Board commenced an initial review of all its regulations pursuant to EGRPRA, a process that ended in 2006. Today, the Board initiates its second EGRPRA review by issuing the first in a series of four requests for public comment, comprising two of the categories--``Applications and Reporting'' and ``Powers and Activities.'' We will address the remaining eight categories in the next three requests for comment.
DATES: Comment must be received on or before September 2, 2014.
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 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 OGCMail@ncua.gov.
FOR FURTHER INFORMATION CONTACT: Ross P. Kendall, Special Counsel to the General Counsel, at the above address, or telephone: (703) 518-
6562.
SUPPLEMENTARY INFORMATION:
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Introduction
Congress enacted EGRPRA \1\ 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 \2\) 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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\1\ Public Law 104-208, Div. A, Title II, section 2222, 110 Stat. 3009 (1996); codified at 12 U.S.C. 3311.
\2\ 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 initial notice, the Board will issue three more notices for comment over the course of the next two years, at regular intervals. The EGRPRA review supplements and complements the reviews of regulations that NCUA conducts under other laws and its internal policies.\3\
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\3\ 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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In addition to the elimination of the Office of Thrift Supervision, another significant development since the first EGRPRA review is the creation of the Consumer Financial Protection Bureau (CFPB). Created with the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010,\4\ the CFPB has assumed responsibility for the administration of several consumer protection regulations 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
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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, and these rules have been retained for purposes of the EGRPRA review. Regulations that were included in the initial review under this category pertaining to share insurance and advertising also remain the province of NCUA and are included as well.
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\4\ Public Law 111-203, 124 Stat. 1376 (2010).
\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 received, 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 EGRPRA regulatory 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 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 EGRPRA review and report process.
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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.\6\
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\6\ Indeed, one direct result of the initial EGRPRA review and ensuing report to Congress was the enactment of the Financial Services Regulatory Relief Act of 2006, which, among other things, extended from twelve to fifteen years the general maturity limit on loans for Federal credit unions and expanded their ability to offer check cashing and money transfer services to individuals within their field of membership. Public Law 109-351, 120 Stat. 1966 (2006).
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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.\7\ Further, the Board addresses the issue of regulatory burden every time it proposes and adopts a rule. Under the Paperwork Reduction Act of 1995,\8\ the Regulatory Flexibility Act,\9\ and internal agency policies, NCUA examines each rulemaking to minimize the burdens it might impose on the industry and considers various alternatives.
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\7\ IRPS 87-2, 52 FR 35231 (Sept. 8, 1987) as amended by IRPS 03-2, 68 FR 32127 (May 29, 2003).
\8\ 44 U.S.C. 3501 et seq.
\9\ 5 U.S.C. 601 et seq.
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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.
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The Board's Proposed Plan
EGRPRA contemplates the categorization of regulations by ``type.'' During the initial EGRPRA 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 is proposing to keep and use the same categories in 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\
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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 EGRPRA 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
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more than one category and are included in all applicable categories.
As with the initial EGRPRA review, 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, certain categories identified by the Agencies during the initial review process 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.
As with the initial review process, with this first notice the Board is publishing two categories of rules for comment on burden reduction. The Board anticipates publishing the remaining eight categories for similar comment periods at regular intervals over the next two years. The Board welcomes recommendations on grouping the remaining categories and the order in which to publish them.
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 two categories of regulations on which NCUA is requesting burden reduction recommendations in this notice. The two 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 eight categories in alphabetical order in a similar format.
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Request for Burden Reduction Recommendations About the First Two Categories of Regulations: ``Applications and Reporting'' and ``Powers and Activities''
The Board seeks public comment on regulations within the first two categories--``Applications and Reporting'' and ``Powers and Activities''--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 reiterates the posture adopted during the initial review process and 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?
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?
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?
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 we 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.
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A. Regulations About Which Burden Reduction Recommendations Are Requested Currently
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Category Subject Regulation cite
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1. Applications and Reporting.............................. Change in official or senior 12 CFR 701.14.
executive officer in credit
unions that are newly
chartered or in troubled
condition.
Field of membership/chartering. 12 CFR 701.1; IRPS 03-1, as amended.
Federal Credit Union Bylaws.... 12 CFR 701.2; Appendix A to Part 701.
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Fees paid by federal credit 12 CFR 701.6.
unions.
Conversion of insured credit 12 CFR 708a.
unions to mutual savings banks.
Mergers of federally insured 12 CFR 708b.
credit unions; voluntary
termination or conversion of
insured status.
Applications for insurance..... 12 CFR 741.0; 741.3; 741.4.
Financial, statistical and 12 CFR 741.6.
other reports.
Conversion to a state-chartered 12 CFR 741.7.
credit union.
Purchase of assets and 12 CFR 741.8.
assumption of liabilities.
2. Powers and Activities:
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Lending, Leasing and Borrowing...................... Loans to members and lines of 12 CFR 701.21.
credit to members.
Participation loans............ 12 CFR 701.22.
Borrowed funds from natural 12 CFR 701.38.
persons.
Statutory lien................. 12 CFR 701.39.
Leasing........................ 12 CFR 714.
Member business loans.......... 12 CFR 723.
Maximum borrowing.............. 12 CFR 741.2.
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Investment and Deposits............................. Investment and deposit 12 CFR 703.
activities.
Fixed assets................... 12 CFR 701.36.
Credit union service 12 CFR 712.
organizations (CUSOs).
Payment on shares by public 12 CFR 701.32.
units and nonmembers.
Designation of low-income 12 CFR 701.34.
status; receipt of secondary
capital accounts by low-income
designated credit unions.
Share, share draft, and share 12 CFR 701.35.
certificate accounts.
Treasury tax and loan 12 CFR 701.37.
depositories; depositories and
financial agents of the
government.
Refund of interest............. 12 CFR 701.24.
Trustee or custodian, tax- 12 CFR 724.
advantaged plans.
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Miscellaneous Activities............................ Incidental powers.............. 12 CFR 721.
Charitable contributions and 12 CFR 721.3(b).
donations, including
charitable donation accounts.
Credit union service contracts. 12 CFR 701.26.
Purchase, sale, and pledge of 12 CFR 701.23.
eligible obligations.
Services for nonmembers within 12 CFR 701.30.
the field of membership.
Suretyship and guaranty........ 12 CFR 701.20.
Foreign branching.............. 12 CFR 741.11.
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B. Categories and Regulations About Which NCUA Will Seek Comment Later
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Category Subject Regulation cite
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3. Agency Programs......................................... Community Development Revolving 12 CFR 705.
Loan Program.
Central liquidity facility..... 12 CFR 725.
Designation of low-income 12 CFR 701.34.
status; receipt of secondary
capital accounts by low-income
designated credit unions.
4. Capital................................................. Prompt corrective action....... 12 CFR 702.
Adequacy of reserves........... 12 CFR 741.3(a).
5. Consumer Protection..................................... Nondiscrimination requirement 12 CFR 701.31.
(Fair Housing).
Truth in Savings (TIS)......... 12 CFR 707.
Loans in areas having special 12 CFR 760.
flood hazards.
Fair Credit Reporting--identity 12 CFR 717, Subpart J.
theft red flags.
Fair Credit Reporting--disposal 12 CFR 717.83.
of consumer information.
Fair Credit Reporting--duties 12 CFR 717.82.
regarding address
discrepancies.
Share insurance................ 12 CFR 745.
Advertising.................... 12 CFR 740.
Disclosure of share insurance.. 12 CFR 741.10.
Notice of termination of excess 12 CFR 741.5.
insurance coverage.
Uninsured membership shares.... 12 CFR 741.9.
Member inspection of credit 12 CFR 701.3.
union books, records, and
minutes.
6. Corporate Credit Unions................................. Corporate credit unions........ 12 CFR 704.
7. Directors, Officers, and Employees...................... Loans and lines of credit to 12 CFR 701.21(d).
officials.
Reimbursement, insurance, and 12 CFR 701.33.
indemnification of officials
and employees.
Retirement benefits for 12 CFR 701.19.
employees.
Management officials interlock. 12 CFR 711.
Fidelity bond and insurance 12 CFR 713.
coverage.
General authorities and duties 12 CFR 701.4.
of federal credit union
directors.
Golden parachutes and 12 CFR 750.
indemnification payments.
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8. Money Laundering........................................ Report of crimes or suspected 12 CFR 748.1.
crimes.
Bank Secrecy Act............... 12 CFR 748.2.
9. Rules of Procedure...................................... Liquidation (involuntary and 12 CFR 709 and 710.
voluntary).
Uniform rules of practice and 12 CFR 747, subpart A.
procedure.
Local rules of practice and 12 CFR 747, subpart B.
procedure.
10. Safety and Soundness................................... Lending........................ 12 CFR 701.21.
Investments.................... 12 CFR 703.
Supervisory committee audit.... 12 CFR 715.
Security programs.............. 12 CFR 748.0.
Guidelines for safeguarding 12 CFR 748, Appendices A and B.
member information and
responding to unauthorized
access to member information.
Records preservation program 12 CFR 749.
and record retention appendix.
Appraisals..................... 12 CFR 722.
Examination.................... 12 CFR 741.1.
Liquidity and contingency 12 CFR 741.12.
funding plans.
Regulations codified elsewhere 12 CFR 741, subpart B.
in NCUA's 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 May 22, 2014.
Gerard Poliquin,
Secretary of the Board.
FR Doc. 2014-12739 Filed 6-3-14; 8:45 am
BILLING CODE 7535-01-P
