[Federal Register Volume 61, Number 135 (Friday, July 12, 1996)]
[Proposed Rules]
[Pages 36663-36664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17783]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 61, No. 135 / Friday, July 12, 1996 / 
Proposed Rules  

[[Page 36663]]



NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 745


Share Insurance and Appendix

AGENCY: National Credit Union Administration (NCUA).

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The proposed rule will amend regulations on the payment of 
share insurance and appeals to provide authority for the liquidating 
agent to pay dividends earned or accrued, but not posted to share 
accounts. Also, the proposed rule will amend those regulations to 
reference other regulations on the construction of time limits when 
computing time.

DATES: Comments must be postmarked or posted on the NCUA electronic 
bulletin board by September 10, 1996.

ADDRESSES: Send comments to Becky Baker, Secretary of the Board, 
National Credit Union Administration Board, 1775 Duke Street, 
Alexandria, Virginia 22314-3428.

FOR FURTHER INFORMATION CONTACT:
Jerry L. Courson, Special Assistant to the President, National Credit 
Union Administration, Asset Liquidation Management Center, 4807 
Spicewood Springs Road, Suite 5100, Austin, Texas 78759 or telephone 
(512) 795-0999 or Allan H. Meltzer, Associate General Counsel, National 
Credit Union Administration, Office of General Counsel, 1775 Duke 
Street, Alexandria, Virginia 22314-3428 or telephone (703) 518-6540.

SUPPLEMENTARY INFORMATION: 

Request for Comments

    The NCUA Board seeks comments on the proposed changes to Part 745 
of the NCUA Rules and Regulations.

Background

    Subpart B of Part 745 of the NCUA Rules and Regulations deals with 
the payment of share insurance and appeals. Specifically, Section 
745.200(b) provides that in determining the amount of share insurance, 
no dividends shall be paid on shares if sufficient undivided and 
current earnings are not available for such purpose. However, dividends 
accrued and posted to share accounts for prior accounting periods are 
considered as principal (regardless of earnings).
    In a small number of liquidations, it has been necessary to 
reconstruct and correct the credit union records. In these liquidation 
cases, the reconstruction process disclosed situations where dividends 
were posted to some member accounts and not posted to other member 
accounts. Under the current regulation, to properly reconstruct these 
accounts and the dividends that were miscalculated or omitted, the 
liquidating agent obtained authority from the NCUA Board.
    Since the current rule was adopted in 1990, only a small number of 
the 352 credit unions placed into involuntary liquidation have involved 
dividend issues. In most cases, the records are updated and dividends 
are posted before liquidation. Based on the current volume, if all 
cases involving unposted dividends were referred to the NCUA Board, the 
workload would be excessive. However, the workload of the liquidating 
agent would increase, because it would be necessary to audit or review 
each member account twice, and the additional workload would result in 
a delay in actual payment to the members.
    The liquidation process would be more efficient if a rule is 
adopted that permits recording unposted dividends. This option also 
provides for a more equitable treatment of all members. The proposed 
rule provides discretion for the liquidating agent to correct share 
accounts by recording dividend payments that were not posted or were 
incorrectly posted by credit union personnel due to fraud, 
embezzlement, or accounting errors. Under the proposed rule, dividends 
not earned in the normal course of business, would not be included in 
the determination of insured shares. In addition, the proposed rule 
provides flexibility in dealing with sufficient earnings. Under the 
current regulation, dividend payments cannot be considered as principal 
for insurance purposes if sufficient earnings were not available. The 
proposed rule is silent on sufficient earnings, but a credit union's 
earnings could be a factor used by the liquidating agent in determining 
insured shares.
    Under the proposed rule, decisions on unposted dividends can be 
made without specific NCUA Board action.
    In addition to amending the rule to deal with unposted dividends, 
the proposed rule making also amends Section 745.200(d) to reference 
Section 747.12(a) of the NCUA Rules and Regulations when computing 
time. The current regulation references Section 747.119, and this 
section no longer exists.

Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe the significant economic impact any proposed regulation may 
have on a substantial number of small credit unions (primarily those 
under $1 million in assets). This proposal deals with the payment of 
share insurance and does not directly impact operating credit unions. 
It does not add any additional requirements or burden. The proposal 
could provide an additional level of confidence for the credit union 
member. Accordingly, the NCUA Board has determined and certifies under 
the authority granted in 5 U.S.C. 605(b) that the proposed rule, if 
adopted, will not have a significant economic impact on a substantial 
number of small credit unions and that a Regulatory Flexibility Act 
analysis is not required.

Paperwork Reduction Act

    The proposed rule does not impose any new paperwork requirements.

Executive Order 12612

    The proposed changes to Section 745.200 will apply to both federal 
credit unions and federally-insured, state chartered credit unions. The 
NCUA Board, pursuant to Executive Order 12612, has determined that the 
proposed amendment will not have substantial direct effect 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. Further, the proposed rule will not 
preempt provisions of state law or regulation.

[[Page 36664]]

List of Subjects in 12 CFR Part 745

    Administrative practice and procedure, Bank deposit insurance, 
Claims, Credit unions.

    By the National Credit Union Administration Board on July 9, 
1996.
Becky Baker,
Secretary of the Board.

    Accordingly, NCUA proposes to amend its regulation as follows:

PART 745--SHARE INSURANCE AND APPENDIX

    1. The authority citation for part 745 continues to read as 
follows:

    Authority: 12 U.S.C. 1766, 1781, 1789.

    2. Section 745.200 is amended by revising paragraphs (b) and (d) to 
read as follows:


Sec. 745.200   General.

* * * * *
    (b) Amount of insurance. The amount of insurance on an insured 
account shall be determined in accordance with the provisions of 
subpart A of this part and the Federal Credit Union Act. For the 
purpose of determining insurance coverage, dividends earned in the 
ordinary course of business and posted to share accounts for any prior 
accounting or dividend period shall be deemed to be principal under 
this rule. Dividends earned or accrued in the ordinary course of 
business, but not posted to share accounts, may be paid at the 
discretion of the liquidating agent. In making such determination, the 
liquidating agent will take into consideration whether the failure to 
post dividends earned or accrued was due to the fraud, embezzlement or 
accounting errors of credit union personnel. The liquidating agent may 
require an accountholder to submit documentation supporting any claim 
for unposted dividends not otherwise evidenced in the credit union 
records. However, in no event will dividend amounts be considered as 
principal for insurance purposes pursuant to this section if not 
consistent with the amounts paid on similar classes of shares.
* * * * *
    (d) Computing time. In computing any period of time prescribed by 
this subpart, the provisions of Sec. 747.12(a) shall apply.

[FR Doc. 96-17783 Filed 7-11-96; 8:45 am]
BILLING CODE 7535-01-M