Credit unions: Organization and operations troubled'' credit union definition,
[Federal Register: May 27, 1999 (Volume 64, Number 102)]
[Rules and Regulations]
[Page 28715-28717]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27my99-3]
NATIONAL CREDIT UNION ADMINISTRATION
Organization and Operations of Federal Credit Unions
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final Rule.
SUMMARY: NCUA amends its regulation dealing with newly chartered and troubled credit unions that requires prior notice of the appointment or employment of directors and senior officers. The amendment clarifies when the notice period commences and when the new director or senior officer may begin service.
Also, for corporate credit unions, the amendment clarifies that the definition of a ``troubled'' credit union will be based on the Corporate Risk Information System (CRIS), or on CAMEL for those state- chartered corporate credit unions in states that do not adopt CRIS. Finally, the amendment reflects that corporate credit unions should submit notices of changes in officials or senior management to the Director of the Office of Corporate Credit Unions.
DATES: This rule is effective June 28, 1999.
FOR FURTHER INFORMATION CONTACT: Margaret E. McPartlin, Trial Attorney, Litigation Division, Office of General Counsel, telephone: (703) 518- 6566 or David A. Shetler, Corporate Program Specialist, Office of Corporate Credit Unions, telephone: (703) 518-6646.
SUPPLEMENTARY INFORMATION:
Background
NCUA has a policy of periodically reviewing its regulations to ``update, clarify and simplify existing regulations and eliminate redundant and unnecessary provisions.'' IRPS 87-2, Developing and Reviewing Government Regulations. 52 FR 35231 (September 18, 1987). As part of its regulatory review program, NCUA reviewed Sec. 701.14 of its regulations, 12 CFR 701.14, to determine whether the language of the regulation was clear and effective. Section 701.14 of NCUA's regulations requires that federally insured credit unions that have been
[[Page 28716]]
chartered less than two years or fall within the regulatory definition of a ``troubled credit union'' file a notice with NCUA prior to adding or replacing a member of the board of directors or a committee member, or employing or changing the responsibilities of an individual to a position as a senior executive officer. As a result of NCUA review and questions from credit unions, the Board proposed to clarify the language contained in Sec. 701.14(d)(1) (63 FR 59742, November 8, 1998).
There has been confusion as to when the Regional Director accepts the notice of a proposed change in an official or senior officer; how long the Regional Office has to process the notice; and when the official or senior officer may commence work. The amendment clarifies the language in Sec. 701.14(d)(1) to provide that the Regional Director, within 10 calendar days after receiving the notice package, will notify the credit union in writing either that the notice package is complete and ready for processing, or that specified additional information is needed and must be submitted within 30 calendar days. If the initial notice is complete, the Regional Director will issue a decision of approval or disapproval within 30 calendar days of receipt of the notice. If the initial notice is not complete, the Regional Director's decision period is tolled for the amount of time taken by the credit union to provide the requested additional information. If the requested additional information is not submitted within 30 calendar days, the Regional Director may either disapprove the individual or review the notice based on the information submitted. Once a notice is complete, if the Regional Director does not issue a decision within the required period, the individual is approved.
The NCUA Board has adopted the new CRIS rating system for corporate credit unions. The amendment clarifies that a CRIS rating of 4 or 5 in either the Financial Risk or Risk Management composite rating will be one of the conditions that defines a ``troubled'' federal corporate credit union. As is the case for all federally insured state credit unions in the present rule, the rating assigned by the state supervisor is utilized in determining the definition of a ``troubled'' federally insured, state-chartered corporate credit union.
Language is added to clarify that a 4 or 5 CAMEL composite rating by the state supervisor will be a condition that defines a ``troubled'' federally insured, state-chartered corporate credit union in states that have not adopted the CRIS system. If the state has not adopted either system, NCUA will determine and apply a CRIS rating using the corporate credit union's core examination workpapers.
Also, the existing language of Section 701.14 does not indicate that corporate credit unions should submit notices of changes in officials or senior management to the Director of the Office of Corporate Credit Unions (OCCU). Language was added to the final rule to clarify that corporate credit unions will submit notices to the Director of OCCU and that the Director of OCCU will act on such notices.
Summary of Comments
The NCUA Board received four (4) comment letters regarding the proposal: three from national trade associations and one from a state- chartered credit union. Of the four (4) commenters, three expressed general support for the proposed language. The three commenters, however, did not support the time frames set forth in the latter part of Sec. 701.14 (d)(1). The proposed time frames would have allowed the Regional Director or Director of OCCU ten business days to determine whether a credit union or corporate credit union's notice is complete. The Regional Director or OCCU Director would then have had an additional 30 days to approve or disapprove the proposed official or employee. Two commenters suggested that we allow the Regional Director or Director of OCCU only five (5) business days to determine whether the notice is complete and ready for processing. The same two commenters proposed that the 30 calendar day time frame begin on the day the agency receives the notice of the proposed action and not from the date that the RD or OCCU Director deems the notice complete. Both commenters stated that while the suggested change would limit the amount of time for agency approval, placement of new management would be expedited.
The fourth commenter urged NCUA to draft separate rules and regulations for federally insured state chartered credit unions. The commenter did not make a general or specific objection to the proposed language of Sec. 701.14(d)(1).
As previously described, the amendment partially incorporates the suggestions contained in the comment letters. It allows the Regional Director 30 calendar days from the date the notice is received to approve or disapprove the official or senior officer. Within the first 10 calendar days, however, the Regional Director will send written notification that the notice package is complete and ready for processing. If the notice is incomplete, the Regional Director will notify the credit union in writing what additional information is needed and that the information must be submitted within 30 calendar days. This will prevent unreasonable delays on the part of the applicant, considering that pre-approved commencement of temporary service is permitted by Section 701.14(e) of the regulations. The Regional Director's 30 day time period from the date of receiving the notice will be tolled when additional information is requested and the Regional Director will suspend processing of the notice until the requested information is submitted. If the requested information is not received within 30 calendar days, the Regional Director may disapprove the proposed individual or may review the application based on the information provided.
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 Board has determined and certifies that the final rule, if adopted, will not have a significant economic impact on a substantial number of small credit unions. Accordingly, the Board has determined that a Regulatory Flexibility Analysis is not required.
Paperwork Reduction Act
NCUA has determined that the final rule does 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. NCUA has determined that the final rule does not constitute a significant regulatory action for the purposes of the Executive Order.
Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) 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 Procedures Act. 5 U.S.C. 551. The Office of Management and Budget has reviewed this rule and has determined that for purposes of the Small Business Regulatory Enforcement
[[Page 28717]]
Fairness Act of 1996 this is not a major rule.
List of Subjects in 12 CFR Part 701
Credit unions, Senior executive officials.
By the National Credit Union Administration Board on May 19, 1999. Becky Baker, Secretary of the Board.
For the reasons set forth in the preamble, 12 CFR part 701 is amended as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
-
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.
-
Section 701.14 is amended as follows.
-
Revise the introductory text of paragraph (b)(3) and add paragraph (b)(4).
-
Revise paragraph (c)(2).
-
Amend paragraph (d)(1) by adding two new sentences after the first sentence and by removing the last three sentences and adding five sentences. The revisions and additions to section 701.14 read as follows:
Sec. 701.14 Change in official or senior executive officer in credit unions that are newly chartered or are in troubled condition.
* * * * *
(b) * * *
(3) Except as provided in paragraph (b)(4) of this section for corporate credit unions, ``troubled condition'' means any insured credit union that has one or a combination of the following conditions: * * * * *
(4) In the case of a corporate credit union, ``troubled condition'' means any insured corporate credit union that has one or a combination of the following conditions:
(i) Has been assigned
(A) A 4 or 5 Corporate Risk Information System (CRIS) rating by NCUA in either the Financial Risk or Risk Management composites, in the case of a federal corporate credit union, or
(B) An equivalent 4 or 5 CRIS rating in either the Financial Risk or Risk Management composites by the state supervisor in the case of a federally insured, state-chartered corporate credit union in a state that has adopted the CRIS system, or an equivalent 4 or 5 CAMEL composite rating by the state supervisor in the case of a federally insured, state-chartered corporate credit union in a state that uses the CAMEL system, or
(C) A 4 or 5 CRIS rating in either the Financial Risk or Risk Management composites by NCUA based on core workpapers received from the state supervisor in the case of a federally insured, state- chartered credit union in a state that does not use either the CRIS or CAMEL system. In this case, the state supervisor will be notified in writing by the Director of the Office of Corporate Credit Unions that the corporate credit union has been designated by NCUA as a troubled institution;
(ii) has been granted assistance as outlined under Sections 116 or 208 of the Federal Credit Union Act.
(c) * * *
(2) The credit union meets the definition of troubled condition as set forth in paragraph 701.14(b)(3) or (4). * * * * *
(d) Procedures for notice of proposed change in official or senior executive officer.
(1) Filing and acceptance. * * * In the case of a corporate credit union, notice shall be filedwith the Director of the Office of Corporate Credit Unions. Additional references herein to Regional Director will, for corporate credit unions, mean the Director of the Office of Corporate Credit Unions. * * * Within ten calendar days after receiving the notice, the Regional Director will inform the credit union either that the notice is complete or that additional specified information is needed and must be submitted within 30 calendar days. If the initial notice is complete, the Regional Director will issue a written decision of approval or disapproval to the individual and the credit union within 30 calendar days of receipt of the notice. If the initial notice is not complete, the Regional Director will issue a written decision within 30 calendar days of receipt of the original notice plus the amount of time taken by the credit union to provide the requested additional information. If the additional information is not submitted within 30 calendar days of the Regional Director's request, the Regional Director may either disapprove the proposed individual or review the notice based on the information provided. If the credit union and the individual have submitted all requested information and the Regional Director has not issued a written decision within the applicable time period, the individual is approved. * * * * *
[FR Doc. 99-13308Filed5-26-99; 8:45 am]
BILLING CODE 7535-01-U
-
