[Federal Register Volume 60, Number 219 (Tuesday, November 14, 1995)]
[Rules and Regulations]
[Pages 57173-57174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28014]



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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 707


Truth in Savings

AGENCY: National Credit Union Administration.

ACTION: Final rule: extension of compliance date.

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SUMMARY: The NCUA Board is extending the compliance date for 
nonautomated and insufficiently automated credit unions that have 
assets of $2 million or less as reported to, or determined by, the 
NCUA. The extension gives the smaller, automation impaired credit 
unions continued immunity from compliance until Congress has acted on 
its contemplated regulatory relief initiatives, which might ultimately 
exempt their compliance with Truth in Savings.

DATES: Effective Date: This document is effective January 1, 1996.

    Compliance Date: The compliance date of part 707 is amended and 
extended to January 1, 1997, for credit unions of an asset size of $2 
million or less as reported to, or determined by, the NCUA, that are 
not sufficiently automated.

FOR FURTHER INFORMATION CONTACT: Richard Schulman, Associate General 
Counsel, or Martin Conrey, Staff Attorney, Office of General Counsel, 
telephone (703) 518-6540.

SUPPLEMENTARY INFORMATION: 

Background

Prior Extensions

    NCUA has twice before extended the compliance date for part 707, 
which implements the Truth in Savings Act (TISA), for certain small, 
underautomated credit unions. Both times, the NCUA Board took into 
consideration the limited resources of the exempted credit unions. The 
first time, the compliance date of part 707 was extended to March 31, 
1995, for credit unions of an asset size between $500,000 and $1 
million as of December 31, 1993, that are not automated. (Final rule, 
59 FR 13435, March 22, 1994.) Simultaneously, the compliance date of 
part 707 was extended to June 30, 1995, for credit unions of an asset 
size of less than $500,000 as of December 31, 1993, that are not 
automated. The second time, the compliance date of part 707 was 
extended to January 1, 1996, for credit unions of an asset size of $2 
million or less as of December 31, 1993, that were nonautomated or 
grossly

[[Page 57174]]

underautomated. (Final rule; extension of compliance date, 59 FR 39425, 
August 3, 1994). The compliance date remains January 1, 1995, for all 
other credit unions.

Legislative Activity

    Since the last extension, several bills have been introduced into 
the 104th Congress of the United States to either repeal, or restrict 
the scope of TISA. ``A bill to repeal the Truth in Savings Act,'' H.R. 
337, introduced in the House of Representatives on January 4, 1995, 
would repeal TISA. The ``Financial Institutions Regulatory Relief Act 
of 1995,'' H.R. 1858, introduced in the House of Representatives on 
June 15, 1995, would amend TISA by repealing many of its disclosure 
requirements and civil liability provisions. Section 270(3)(B) of H.R. 
1858 excludes ``nonautomated credit unions which were not required to 
comply with the requirements of [TISA] as of the date of the enactment 
of [H.R. 1858] pursuant to the determination of the NCUA Board.'' The 
``Economic Growth and Regulatory Paperwork Reduction Act of 1995,'' S. 
650, introduced in the Senate on March 30, 1995, would repeal TISA and 
replace it with the Payment of Interest Act (PIA). PIA basically 
eliminates TISA's disclosure requirements, but retains the requirement 
that interest and dividends on accounts be calculated on the full 
amount of principal in the account for each day and at the rate(s) 
disclosed by the depository institution.

Importance of Small Credit Unions

    The NCUA Board is very concerned with the continued viability of 
small credit unions. Ten years ago, credit unions under $2 million in 
size made up about two-thirds (10,564) of all federally insured credit 
unions. Today, such credit unions number only 3,666, about one-third of 
federally insured credit unions. In addition, the assets of today's 
3,666 smallest credit unions are approximately one percent of total 
assets in all credit unions, while credit unions of $2 million or less 
accounted for 7.7 percent of total assets ten years ago. The average 
credit union today has $25.4 million in assets, compared to $5 million 
ten years ago.
    However, many of these small credit unions are already automated or 
have in-house data processing capabilities, and have not been covered 
by previous exemptions. Only a small number of credit unions are 
affected by this amendment and extension. NCUA previously determined 
that there were 1,248 credit unions under $2 million in assets that 
have no or insufficient or inadequate computers or in-house data 
processing capability.
    Given Congressional legislative activity, and requests for a 
postponement in the Official Staff Commentary from national trade 
associations, the Board has decided, in the name of regulatory relief 
and in the spirit of the National Performance Review and Presidential 
Regulatory Reform Initiative, to delay the compliance date of part 707 
until January 1, 1997 for affected credit unions. A compliance date 
extension of this length will enable the NCUA to observe and implement 
any possible legislative initiatives by the 104th Congress, while also 
providing continued regulatory relief to presently exempted credit 
unions. In the meantime, the Board continues to support several small 
credit union initiatives to continue the development of small credit 
unions. Recently, the Board authorized an NCUA Conference on ``Serving 
the Underserved'' scheduled for August of 1996. The purpose of this 
conference is to provide opportunities for education, networking 
between different asset size credit unions, and to find solutions to 
availability of service issues faced by the agency and credit unions. 
In April of 1994, the NCUA Board adopted a program to place retired 
NCUA computers with nonautomated credit unions with $2 million or less 
in assets. To date, 435 small credit unions have participated in this 
program and received retired NCUA examiner laptop computers. The Board 
is also working on several other initiatives to enhance small credit 
union development.
    The compliance date has remained January 1, 1995, for all other 
credit unions (automated credit unions under $2 million in assets and 
all credit unions having over $2 million or more in assets).

Definition of Nonautomated-

    NCUA generally uses the December 31, 1994, NCUA Form 5300 report to 
determine the requisite nonautomation status and asset size for those 
credit unions filing Form 5300 reports that are eligible for the 
extensions in required compliance.
    Credit unions which do not file Form 5300 reports will be permitted 
to prove nonautomation status and asset size by other means. By the 
term ``nonautomation status'' NCUA means those credit unions without 
adequate and sufficient computer or data processing capacity and 
capability to operate and maintain a share and loan software program 
able to cover all member accounts at the credit union. NCUA will 
consider verified self-certifications, certifications by appropriate 
state supervisory authorities, and other equivalent forms of proof as 
sufficient for eligibility for the extension by non-federally insured 
credit unions. With the assistance of the affected credit unions, trade 
groups, and the NCUA regional and central office staffs, NCUA has 
identified credit unions in need of Truth in Savings compliance 
assistance, and is providing various educational and other assistance 
to the affected small, nonautomated credit unions.
    Credit unions currently exempt, that surpass the $2 million asset 
threshold during the 1995 calendar year, should plan to comply with 
TISA on January 1, one year subsequent to the year end reporting cycle 
in which they report assets over $2 million.

Administrative Procedure Act

    The amendment and extension made to this part are not subject to 
the notice and comment provisions of the Administrative Procedure Act 
(APA), 5 U.S.C. 551 et seq. The extension relates to a few credit 
unions that need more time and assistance in complying with part 707. 
No major changes are contemplated, or made, by this amendment and 
extension. Therefore, the NCUA Board has determined that, in this case, 
the APA notice and comment procedures for this amendment and extension 
are impracticable, unnecessary, and contrary to the public interest. 5 
U.S.C. 553(b)(3)(B).

    By the National Credit Union Administration Board on November 6, 
1995.
Becky Baker,
Secretary of the Board.
[FR Doc. 95-28014 Filed 11-13-95; 8:45 am]
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