Temporary Regulatory Relief in Response to COVID-19-Prompt Corrective Action
| Published date | 28 May 2020 |
| Record Number | 2020-11384 |
| Section | Rules and Regulations |
| Court | National Credit Union Administration |
Federal Register, Volume 85 Issue 103 (Thursday, May 28, 2020)
[Federal Register Volume 85, Number 103 (Thursday, May 28, 2020)]
[Rules and Regulations]
[Pages 31952-31957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11384]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 702
RIN 3133-AF19
Temporary Regulatory Relief in Response to COVID-19--Prompt
Corrective Action
AGENCY: National Credit Union Administration (NCUA).
ACTION: Interim final rule.
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SUMMARY: The NCUA Board (Board) is temporarily modifying certain
regulatory requirements to help ensure that federally insured credit
unions (FICUs) remain operational and liquid during the COVID-19
crisis. Specifically, the Board is issuing two temporary changes to its
prompt corrective action (PCA) regulations. The first amends its
regulations to temporarily enable the Board to issue an order
applicable to all FICUs to waive the earnings retention requirement for
any FICU that is classified as adequately capitalized. The second
modifies its regulations with respect to the specific documentation
required for net worth restoration plans (NWRPs) for FICUs that become
undercapitalized. These temporary modifications will be in place until
December 31, 2020.
DATES: This rule is effective on May 28, 2020. Comments must be
received on or before June 29, 2020.
ADDRESSES: You may submit written comments, identified by RIN 3133-
AF19, 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.
Fax: (703) 518-6319. Include ``[Your Name]--Comments on
Temporary Regulatory Relief Rule in Response to COVID-19--Prompt
Corrective Action'' in the transmittal.
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: You may view all public comments on the Federal
eRulemaking Portal at http://www.regulations.gov as submitted, except
for those we cannot post for technical reasons. The NCUA will not edit
or remove any identifying or contact information from the public
comments submitted. Due to social distancing measures in effect, the
usual opportunity to inspect paper copies of comments in the NCUA's law
library is not currently available. After social distancing measures
are relaxed, visitors may make an appointment to review paper copies by
calling (703) 518-6540 or emailing [email protected].
FOR FURTHER INFORMATION CONTACT: Policy and Analysis: Amanda Parkhill,
Director, Policy Division, Office of Examination and Insurance, at
(703) 518-6360; Legal: Marvin Shaw and Thomas Zells, Staff Attorneys,
Office of General Counsel, at (703) 518-6540; or by mail at: National
Credit Union Administration, 1775 Duke Street, Alexandria, Virginia
22314.
SUPPLEMENTARY INFORMATION:
I. Background
A. COVID-19 Pandemic
The COVID-19 pandemic has created uncertainty for FICUs and their
members. The Board is working with federal and state regulatory
agencies, in addition to FICUs, to assist FICUs in managing their
operations and to facilitate continued assistance to credit union
members and communities impacted by the coronavirus. As part of these
ongoing efforts, the Board is temporarily modifying certain regulatory
requirements to help ensure that FICUs continue to operate efficiently,
to ensure that FICUs maintain sufficient liquidity, and to account for
the potential temporary increase in shares that FICUs may experience
during the COVID-19 pandemic. Specifically, the temporary amendments in
this interim final rule will allow FICUs to better utilize resources by
reducing the administrative burden associated with a temporary increase
in shares. The Board has concluded that the amendments
[[Page 31953]]
will provide FICUs with necessary additional flexibility in a manner
consistent with the NCUA's responsibility to maintain the safety and
soundness of the credit union system. The temporary amendments are
effective upon publication and will be in place through the end of
calendar year 2020.
B. Prompt Corrective Action
1. Statutory Provisions
In 1998, Congress enacted the Credit Union Membership Access Act
(``CUMAA'').\1\ CUMAA amended the Federal Credit Union Act (``the
Act'') to require the NCUA to adopt by regulation a system of PCA
consisting of minimum capital standards and corresponding remedies to
improve the net worth of federally-insured ``natural person'' credit
unions.\2\ The purpose of PCA is to ``resolve the problems of insured
credit unions at the least possible long-term loss to the [National
Credit Union Share Insurance Fund (`NCUSIF')].'' \3\
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\1\ Pubic Law 105-219, 112 Stat. 913 (1998).
\2\ 12 U.S.C. 1790d et seq.
\3\ 12 U.S.C. 1790d(a)(1).
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The statute designated three principal components of PCA: (1) A
framework combining mandatory actions prescribed by statute with
discretionary actions developed by the NCUA; (2) an alternative system
of PCA to be developed by the NCUA for FICUs which CUMAA defines as
``new;'' and (3) a risk-based net worth requirement to apply to FICUs
which the NCUA defines as ``complex.'' For FICUs other than those
meeting the statutory definition of a ``new'' FICU, CUMAA mandated a
framework of mandatory and discretionary supervisory actions indexed to
five statutory net worth categories. These categories include ``well
capitalized,'' ``adequately capitalized,'' ``undercapitalized,''
``significantly undercapitalized,'' and ``critically
undercapitalized.'' The mandatory actions and conditions triggering
conservatorship and liquidation are expressly prescribed by statute.\4\
To supplement the mandatory actions, the statute directed the NCUA to
develop discretionary actions which are ``comparable'' to the
``discretionary safeguards'' available under section 38 of the Federal
Deposit Insurance Act, which is the statute that applies PCA to other
federally-insured depository institutions.\5\
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\4\ 12 U.S.C. 1790d(e), (f), (g), and (i); 12 U.S.C.
1786(h)(1)(F); 12 U.S.C. 1786(a)(3)(A)(1).
\5\ 12 U.S.C. 1790d(b)(1)(A); S. Rep. No. 193, 105th Cong., 2d
Sess. 12 (1998) (S. Rep.); H.R. Rep. No. 472, 105th Cong; see also
12 U.S.C. 1831o (Section 38 of the Federal Deposit Insurance Act
setting forth the PCA requirements for banks).
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The Act addresses the earnings retention requirement applicable to
FICUs that are not well capitalized.\6\ Such FICUs are required to
annually set aside as net worth an amount equal to not less than 0.4%
of their total assets.\7\ The Board has the authority to decrease the
earnings retention requirement.\8\ To accomplish this, the Board may
issue an order, if it determines that the decrease is necessary to
avoid a significant redemption of shares and further the purpose of
that PCA provision of the Act. The Act also requires the Board to
periodically review any order issued under that section.\9\
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\6\ 12 U.S.C. 1790d(e).
\7\ 12 U.S.C. 1790d(e)(1).
\8\ 12 U.S.C. 1790d(e)(2).
\9\ 12 U.S.C. 1790d(e)(2)(B).
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Separately, 12 U.S.C. 1790d(f) sets forth requirements related to
NWRPs, which FICUs must submit to the NCUA and which the NCUA must
review when a FICU becomes undercapitalized. The regulatory provisions
addressing the procedures and documentation requirements for NWRPs are
codified at 12 CFR 702.206 and are detailed below.
2. Regulatory Provisions
In February 2000, the NCUA Board adopted part 702 and subpart L of
part 747, establishing a comprehensive system of PCA that combines
mandatory supervisory actions prescribed by the statute with
discretionary supervisory actions developed by the NCUA (2000 final
rule).\10\ Each of these supervisory actions index to the five
statutory net worth categories noted above. In addition, the 2000 final
rule permits the NCUA to impose ``other action to better carry out the
purpose of PCA'' than any discretionary supervisory action available in
that category.\11\ In the proposal that provided the basis for the 2000
final rule, the Board noted that ``Part 702 also amplifies the terms of
the statutory exception to the 0.4% minimum set aside. Specifically,
the Board stated that it interprets the phrase by order to indicate
that exceptions to the 0.4% statutory minimum are to be granted on a
case-by-case basis.'' \12\ The Board has historically interpreted these
orders on a case-by-case basis. However, given the current
unprecedented situation where many FICUs broadly face similar
circumstances that affect net worth, the Board has determined that it
is appropriate to implement the changes in this rule, as detailed
below.
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\10\ 65 FR 8560 (Feb. 18, 2000).
\11\ 12 CFR 702.202(b)(9).
\12\ 64 FR 27090 (May 18, 1999).
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In this rulemaking, the Board is adopting two changes to the PCA
requirements. The first amends Sec. 702.201 of the NCUA's regulations
to allow the Board to temporarily waive the earnings retention
requirement for an adequately capitalized FICU, and the second modifies
Sec. 702.206(c) of the NCUA's regulations with respect to NWRPs.
Section III of this preamble discusses the temporary regulatory
amendments in greater detail.
II. Legal Authority
The Board is issuing this interim final rule pursuant to its
authority under the Act.\13\ The Act grants the Board a broad mandate
to issue regulations governing both federal credit unions and, more
generally, all FICUs. For example, section 120 of the Act is a general
grant of regulatory authority and authorizes the Board to prescribe
rules and regulations for the administration of the Act.\14\ Section
209 of the Act is a plenary grant of regulatory authority to issue
rules and regulations necessary or appropriate for the Board to carry
out its role as share insurer for all FICUs.\15\ Other provisions of
the Act confer specific rulemaking authority to address prescribed
issues or circumstances.\16\ Accordingly, the Act grants the Board
broad rulemaking authority to ensure that the credit union industry and
the NCUSIF remain safe and sound. Such specific rulemaking authority is
set forth in section 216(b) with respect to PCA.\17\
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\13\ 12 U.S.C. 1751 et seq.
\14\ 12 U.S.C. 1766(a).
\15\ 12 U.S.C. 1789.
\16\ An example of a provision of the Act that provides the
Board with specific rulemaking authority is section 207 (12 U.S.C.
1787), which is a specific grant of authority over share insurance
coverage, conservatorships, and liquidations.
\17\ 12 U.S.C. 1790d(b).
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III. Section-by-Section Analysis
A. Section 702.201--Earnings Retention Requirement for ``Adequately
Capitalized'' FICUs
With respect to earnings retention, a FICU that is classified as
``adequately capitalized'' or lower must increase the dollar amount of
its net worth quarterly by an amount equivalent to at least \1/10\th of
a percent of its total assets and must quarterly transfer at least that
amount (for a total of 0.4% annually) from undivided earnings to its
regular reserve account every quarter until it is ``well capitalized.''
\18\ The purpose of this provision is to restore a FICU that is less
than well capitalized to a well-
[[Page 31954]]
capitalized position in an incremental manner.
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\18\ This relief is provided for FICUs that are required to make
an earnings retention transfer under Sec. Sec. 702.201, 702.202,
702.203, 702.204, 702.304, and 702.305.
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As discussed above, current Sec. 702.201 provides that the Board
may waive this requirement on a case-by-case basis upon application by
an affected FICU. The Act provides broader authority for the Board to
issue an order to waive this requirement and does not require an
application or individual orders.\19\ In response to the COVID-19
pandemic and resulting economic disruption, the Board has determined
that it is appropriate to amend Sec. 702.201 temporarily to provide
express regulatory authority for the Board to issue a single order
waiving the earnings retention requirement for all FICUs that are
classified as adequately capitalized during this time, subject to the
applicable Regional Director retaining authority to subsequently
require an application if a particular FICU poses undue risk to the
NCUSIF or exhibits material safety and soundness concerns. Amending the
regulation in this manner will allow the Board to respond to
circumstances broadly affecting many FICUs with a single issuance
rather than numerous individual waiver approvals. This provision will
be effective on May 28, 2020 and will expire on December 31, 2020,
consistent with other recent COVID-19 regulatory relief rules that the
Board has issued. Separate from this regulatory amendment, the Board
intends to issue the order described above, which will be applicable to
adequately capitalized FICUs and will grant relief from the earnings
retention requirement without requiring those FICUs to submit
applications and receive individual waiver approvals, subject to the
qualification noted above.
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\19\ See 1 U.S.C. 1 (providing that unless context indicates
otherwise, words importing the singular also apply to several
persons or parties).
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The Board is exercising this authority under 12 U.S.C. 1790d(e)(2)
in order to enhance flexibility in the application of the earnings
retention requirement to avoid a reduction of shares and thus retain
system liquidity and capital adequacy, thereby furthering the purpose
of PCA. The Board further notes that during this time, FICU operations
have been significantly disrupted because of stay-at-home orders,
reduced staff, and related complications. This procedure will lessen
the administrative burden on FICUs, and the NCUA in providing this
relief, by avoiding the need for numerous waiver applications and
responses. The Board notes that qualification in the planned order
regarding FICUs that pose undue risk or material safety and soundness
concerns will help ensure that the purposes of PCA are maintained
during this time.
This approach affords the agency the flexibility to address
potential difficulties faced by FICUs during this time of unprecedented
economic hardship. The Board also notes that the current, specific
requirements on earnings retention waivers are based on a regulatory
provision rather than a specific statutory directive.\20\ Accordingly,
the Board has flexibility to modify the regulatory provision to address
the financial circumstances of individual FICUs as well as the broader
credit union system. This is consistent with the overall statutory
structure of PCA, which combines both mandatory and discretionary
provisions.
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\20\ The Board notes that 12 U.S.C. 1790d(e)(1) requires
earnings retention. However, additional provisions in 12 CFR part
702, including those related to timing and the content of the
application, supplement this statutory provision.
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Credit union members are facing unprecedented pressures and looking
to FICUs to provide necessary credit or access to funds, which could
place strain on FICU liquidity. Allowing for a broad order relieving
adequately capitalized FICUs from this requirement is consistent with
the statutory criteria for issuing such an order, namely avoiding a
significant redemption of shares and furthering the purpose of 12
U.S.C. 1790d to ``resolve the problems of insured credit unions at the
least possible long-term loss to the Fund.'' \21\
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\21\ 12 U.S.C. 1790d(a)(1).
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Accordingly, the Board is amending Sec. 702.201 to adopt the
temporary provision to issue a broadly applicable order. The Board
plans to issue through a separate action an order consistent with this
new provision to set forth the terms of relief from the earnings
retention requirement.
B. Section 702.206(c)--Net Worth Restoration Plans (NWRPs); Contents of
NWRP
With respect to NWRPs, the Act provides a broad directive that a
FICU that is less than adequately capitalized must submit an applicable
net worth restoration plan to the NCUA. The NCUA, by regulation, has
provided additional details to flesh out this statutory provision.
Section 702.206(a) of the NCUA's regulations specifies the schedule for
filing the plan, and Sec. 702.206(c) of the NCUA's regulations
outlines the contents of a net worth restoration plan.\22\
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\22\ 12 CFR 702.206(c). Under the current regulation, an NWRP
must--
Specify--
[cir] A quarterly timetable of steps the credit union will take
to increase its net worth ratio so that it becomes ``adequately
capitalized'' by the end of the term of the NWRP, and to remain so
for four (4) consecutive calendar quarters. If ``complex,'' the
credit union is subject to a risk-based net worth requirement that
may require a net worth ratio higher than six percent (6%) to become
``adequately capitalized'';
[cir] The projected amount of earnings to be transferred to the
regular reserve account in each quarter of the term of the NWRP as
required under Sec. 702.201(a), or as permitted under Sec.
702.201(b);
[cir] How the credit union will comply with the mandatory and
any discretionary supervisory actions imposed on it by the NCUA
Board under this subpart;
[cir] The types and levels of activities in which the credit
union will engage; and
[cir] If reclassified to a lower category under Sec.
702.102(b), the steps the credit union will take to correct the
unsafe or unsound practice(s) or condition(s);
Include pro forma financial statements, including any
off-balance sheet items, covering a minimum of the next two years;
and
Contain such other information as the NCUA Board has
required.
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The Board has decided that it is appropriate to waive the net worth
restoration plan content requirements for FICUs that become classified
as undercapitalized (has a net worth ratio of 4 percent to 5.99
percent) predominantly as a result of share growth. In these cases, the
FICU may submit a significantly simpler net worth restoration plan to
the applicable Regional Director noting that the FICU fell to
undercapitalized because of share growth. Specifically, a FICU would be
required to attest that its reduction in capital was caused by share
growth and that such share growth is a temporary condition due to the
COVID-19 pandemic. Federally insured, state-chartered credit unions
must comply with applicable state requirements when submitting NWRPs
for state supervisory authority approval.
When reviewing NWRPs submitted under this authority, the Regional
Director will determine if the decrease in the net worth ratio was
predominantly a result of share growth. To assess the reason for the
decrease, the Regional Director will analyze the numerator and
denominator of the net worth ratio. If there is no change or an
increase in the numerator and an increase in the denominator, this
would indicate that the decrease in the net worth ratio was due to
share growth. If there is an increase in the denominator and a decrease
in the numerator, the Regional Director will analyze whether the
decrease in the numerator would have caused the credit union to fall to
a lower net worth classification if there were no change in the
denominator. If so, the credit union's net worth decline would not be
predominantly due to share growth and the credit union
[[Page 31955]]
would not be eligible to submit a streamlined NWRP.
The Board has determined that it is appropriate to modify the
regulation addressing NWRPs given the disruption caused by the COVID-19
pandemic. The Board believes that it will be able to fulfill its
statutory duty to evaluate the net worth restoration plan even if the
plan is more concise and streamlined than plans submitted prior to the
COVID-19 crisis. Such a streamlined approach is acceptable because the
more extensive information required under the current requirements may
not be practicable or useful under the current situation. Further, the
current requirement addresses methods for the Board to evaluate the
plan and not for approval. The Board believes it can determine if a
plan is acceptable even if it lacks some of the detailed submissions
that the current regulation specifies. The Board further notes that if
a FICU temporary falls below being adequately capitalized (or lower)
because of share growth, the risk is limited and net worth will likely
increase as the shares are withdrawn.
IV. Regulatory Procedures
A. Administrative Procedure Act
The Board is issuing the interim final rule without prior notice
and the opportunity for public comment and the delayed effective date
ordinarily prescribed by the Administrative Procedure Act (APA).\23\
Pursuant to the APA, general notice and the opportunity for public
comment are not required with respect to a rulemaking when an ``agency
for good cause finds (and incorporates the finding and a brief
statement of reasons therefor in the rules issued) that notice and
public procedure thereon are impracticable, unnecessary, or contrary to
the public interest.'' \24\
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\23\ 5 U.S.C. 553.
\24\ 5 U.S.C. 553(b)(3).
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The Board believes that the public interest is best served by
implementing the interim final rule immediately upon publication in the
Federal Register. The Board notes that the COVID-19 pandemic is
unprecedented. It is a rapidly changing and difficult to anticipate how
the disruptions caused by the pandemic will manifest themselves within
the financial system and how individual FICUs may be impacted. Because
of the widespread impact of a pandemic and the speed with which
disruptions have transmitted throughout the United States, the Board
believes it is has good cause to determine that ordinary notice and
public procedure are impracticable and that moving expeditiously in the
form of an interim final rule is in the best of interests of the public
and the FICUs that serve that public. The temporary regulatory changes
are proactive steps that are designed to alleviate potential liquidity
and resource strains including strains on capital adequacy and are
undertaken with expedience to ensure the maximum intended effects are
in place at the earliest opportunity.
The Board values public input in its rulemakings and believes that
providing the opportunity for comment enhances its regulations.
Accordingly, the Board is soliciting comments on its rules even when
not required under the APA, such as for the rules it issues on an
interim-final basis. The amendment made by the interim final rule will
automatically expire at the close of December 31, 2020, and are limited
in number and scope. For these reasons, the Board finds that there is
good cause consistent with the public interest to issue the rule
without advance notice and comment.\25\
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\25\ For the same reasons, the Board is not providing the usual
60-day comment period before finalizing this rule. See NCUA
Interpretive Ruling and Policy Statement (IRPS) 87-2, as amended by
IRPS 03-2 and IRPS 15-1. 80 FR 57512 (Sept. 24, 2015), available at
https://www.ncua.gov/files/publications/irps/IRPS1987-2.pdf.
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The APA also requires a 30-day delayed effective date, except for
(1) substantive rules which grant or recognize an exemption or relieve
a restriction; (2) interpretative rules and statements of policy; or
(3) as otherwise provided by the agency for good cause.\26\ Because the
rule relieves currently codified limitations and restrictions, the
interim final rule is exempt from the APA's delayed effective date
requirement. As an alternative basis to make the rule effective without
the 30-day delayed effective date, the Board finds there is good cause
to do so for the same reasons set forth above regarding advance notice
and opportunity for comment.
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\26\ 5 U.S.C. 553(d).
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B. Congressional Review Act
For purposes of the Congressional Review Act,\27\ the Office of
Management and Budget (OMB) makes a determination as to whether a final
rule constitutes a ``major'' rule. If the OMB deems a rule to be a
``major rule,'' the Congressional Review Act generally provides that
the rule may not take effect until at least 60 days following its
publication.
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\27\ 5 U.S.C. 801-808.
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The Congressional Review Act defines a ``major rule'' as any rule
that the Administrator of the Office of Information and Regulatory
Affairs of the OMB finds has resulted in or is likely to result in (A)
an annual effect on the economy of $100,000,000 or more; (B) a major
increase in costs or prices for consumers, individual industries,
Federal, State, or local government agencies or geographic regions, or
(C) significant adverse effects on competition, employment, investment,
productivity, innovation, or on the ability of United States-based
enterprises to compete with foreign-based enterprises in domestic and
export markets.\28\
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\28\ 5 U.S.C. 804(2).
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For the same reasons set forth above, the Board is adopting the
interim final rule without the delayed effective date generally
prescribed under the Congressional Review Act. The delayed effective
date required by the Congressional Review Act does not apply to any
rule for which an agency for good cause finds (and incorporates the
finding and a brief statement of reasons therefor in the rule issued)
that notice and public procedure thereon are impracticable,
unnecessary, or contrary to the public interest.\29\ In light of
current market uncertainty, the Board believes that delaying the
effective date of the rule would be contrary to the public interest for
the same reasons discussed above.
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\29\ 5 U.S.C. 808.
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As required by the Congressional Review Act, the Board will submit
the final rule and other appropriate reports to Congress and the
Government Accountability Office for review.
C. 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 (44 U.S.C. 3507(d)). For
purposes of the PRA, a paperwork burden may take the form of a
reporting, recordkeeping, or a third-party disclosure requirement,
referred to as an information collection.
The amendment to Sec. 702.201 is decreasing the earnings retention
requirement for all FICUs that are classified as adequately capitalized
during this time. Currently, FICUs must request a waiver for each
quarterly transfer made from undivided earning to its regular reserve
account until well capitalized. By the actions of this rule the waiver
requirement is temporary suspended for adequately capitalized credit
unions and the information collection requirement will be reduced
[[Page 31956]]
from 113 respondents providing three waivers annually to 23
respondents.
Section 702.206 provides that a FICU that is less than adequately
capitalized must submit an applicable NWRP to the NCUA. The temporary
rule allows a FICU that becomes undercapitalized to submit a
significantly simpler NWRP to NCUA, which will reduce the estimated
burden associated with the preparation from 27 hours to 2 hours. This
would affect an estimated 31 FICUs that would fall under the category
of undercapitalized.
The information collection requirements of part 702 (subparts A
through D) are currently covered by OMB control number 3133-0154. These
temporary amendments will reduce the number of estimated responses from
482 to 155, with a decrease in the estimated total burden hours by
2,854, for a total information collection burden of 569 hours.
NCUA has obtain emergency approval from the Office of Management
and Budget for a 6-month period. During this time the Agency will
accept public comments on the information collection requirements and
take appropriate action in the final request for PRA approval.
OMB Control Number: 3133-0154.
Title of information collection: Prompt Corrective Actions, 12 CFR
702 (Subparts A-D).
Estimated number of respondents: 89.
Estimated number of responses per respondent: 1.74.
Estimated total annual responses: 155.
Estimated burden per response: 3.67.
Estimated total annual burden: 569.
The NCUA invites comments on: (a) Whether the proposed collection
of information is necessary for the proper performance of the functions
of the agency, including whether the information will have practical
utility; (b) the accuracy of the agency's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used; (c) ways to enhance the quality,
utility and clarity of the information to be collected; and (d) ways to
minimize the burden of the collection of information on those who are
to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology; and (e) estimates of capital or
start-up costs and cost of operation, maintenance, and purchase of
services to provide information.
All comments are a matter of public records. Interested persons are
invited to submit written comments on the information collection to
Dawn Wolfgang, National Credit Union Administration, 1775 Duke Street,
Suite 6032, Alexandria, Virginia 22314; Fax No. 703-519-8579; or email
at [email protected]. Given the limited in-house staff because of
the COVID-19 pandemic, email comments are preferred.
D. Executive Order 13132
Executive Order 13132 \30\ encourages independent regulatory
agencies to consider the impact of their actions on state and local
interests. The 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. The interim final rule will not
have substantial direct effects 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.
The Board has therefore determined that this rule does not constitute a
policy that has federalism implications for purposes of the Executive
order.
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\30\ Executive Order 13132 on Federalism, was signed by former
President Clinton on August 4, 1999, and subsequently published in
the Federal Register on August 10, 1999 (64 FR 43255).
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E. Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this interim final rule will not
affect family well-being within the meaning of Section 654 of the
Treasury and General Government Appropriations Act, 1999.\31\
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\31\ Public Law 105-277, 112 Stat. 2681 (1998).
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F. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires that when
an agency issues a proposed rule or a final rule pursuant to the APA
\32\ or another law, the agency must prepare a regulatory flexibility
analysis that meets the requirements of the RFA and publish such
analysis in the Federal Register.\33\ Specifically, the RFA normally
requires agencies to describe the impact of a rulemaking on small
entities by providing a regulatory impact analysis. For purposes of the
RFA, the Board considers FICUs with assets less than $100 million to be
small entities.\34\
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\32\ 5 U.S.C. 553(b).
\33\ 5 U.S.C. 603, 604.
\34\ NCUA IRPS 15-1. 80 FR 57512 (Sept. 24, 2015).
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As discussed previously, consistent with the APA,\35\ the Board has
determined for good cause that general notice and opportunity for
public comment is unnecessary, and therefore the Board is not issuing a
notice of proposed rulemaking. Rules that are exempt from notice and
comment procedures are also exempt from the RFA requirements, including
conducting a regulatory flexibility analysis, when among other things
the agency for good cause finds that notice and public procedure are
impracticable, unnecessary, or contrary to the public interest.
Accordingly, the Board has concluded that the RFA's requirements
relating to initial and final regulatory flexibility analysis do not
apply.
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\35\ 5 U.S.C. 553(b)(3)(B).
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Nevertheless, the Board seeks comment on whether, and the extent to
which, the interim final rule would affect a significant number of
small entities.
List of Subjects in 12 CFR Part 702
Credit unions, Reporting and recordkeeping requirements.
By the NCUA Board, this 21st day of May 2020.
Gerard Poliquin,
Secretary of the Board.
For the reasons set forth above, the Board amends 12 CFR part 702
as follows:
PART 702--CAPITAL ADEQUACY
0
1. The authority citation for part 702 continues to read as follows:
Authority: 12 U.S.C. 1766(a), 1790d.
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2. Amend Sec. 702.201 by redesignating paragraphs (b)(1) and (2) as
paragraphs (b)(1)(i) and (ii), respectively, and adding a new paragraph
(b)(2) to read as follows:
Sec. 702.201 Prompt corrective action for ``adequately capitalized''
credit unions.
* * * * *
(b) * * *
(2) Notwithstanding paragraph (a) of this section, starting on May
28, 2020 and ending on December 31, 2020, for a credit union that is
adequately capitalized:
(i) The NCUA Board may issue an administrative order specifying
temporary revisions to the earnings retention requirement, to the
extent the NCUA Board determines that such lesser amount--
(A) Is necessary to avoid a significant redemption of shares; and
(B) Would further the purpose of this part.
(ii) Despite the issuance of an administrative order under
paragraph (b)(2) of the section, the Regional Director may require a
credit union to submit an earnings transfer waiver under paragraph
(b)(1) if the credit
[[Page 31957]]
union poses an undue risk the National Credit Union Share Insurance
Fund or exhibits material safety and soundness concerns.
* * * * *
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3. Amend Sec. 702.206 by adding paragraph (c)(4) to read as follows:
Sec. 702.206 Net worth restoration plans.
* * * * *
(c) * * *
(4) Notwithstanding paragraphs (c)(1), (2), and (3) of this
section, the Board may permit a credit union that is undercapitalized
to submit to the Regional Director a streamlined NWRP plan attesting
that its reduction in capital was caused by share growth and that such
share growth is a temporary condition due to COVID-19. A streamlined
NWRP plan is permitted between May 28, 2020 and December 31, 2020.
* * * * *
[FR Doc. 2020-11384 Filed 5-27-20; 8:45 am]
BILLING CODE 7535-01-P
