[Federal Register Volume 61, Number 230 (Wednesday, November 27, 1996)]
[Rules and Regulations]
[Pages 60185-60186]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30287]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 745
Share Insurance and Appendix
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final rule.
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SUMMARY: Currently, the NCUA Rules and Regulations include dividends
accrued and posted to share accounts for any prior accounting period as
principal for determining the amount of share insurance on insured
accounts. To provide equitable treatment, the NCUA Board is amending
the regulations to provide authority for the liquidating agent to
include dividends earned or accrued in the normal course of business
but not posted in the determination of the amount of share insurance on
insured accounts. An outdated reference in the Regulations regarding
time computation is updated.
DATES: The rule is effective on November 27, 1996.
ADDRESSES: National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
FOR FURTHER INFORMATION CONTACT: Jerry L. Courson, Special Assistant to
the President, Asset Management and Assistance Center, National Credit
Union Administration, 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:
Background
Subpart B of Part 745 of the NCUA Rules and Regulations deals with
the payment of share insurance and appeals. Specifically,
Sec. 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.
On July 9, 1996, the NCUA Board issued a Notice of Proposed
Rulemaking, 61 FR 36663 (July 12, 1996), proposing to amend
Sec. 745.200(b) to provide the liquidating agent authority to record
unposted dividends to provide 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 the issue of unposted dividends, the proposed rule
also noted a needed change to the reference in Sec. 745.200(d) to
Sec. 747.119 of the NCUA Rules and Regulations. This is a reference to
the Section in the Regulations on time computation. Section 747.119 no
longer exists and the reference is updated to read Sec. 747.12(a).
The Notice of Proposed Rulemaking included a Request for Comments
seeking public comment on the proposed changes to Part 745 of the NCUA
Rules and Regulations. Five comment letters were received, one from a
federal credit union and four from national and state credit union
leagues. All commenters expressed unqualified support for the proposed
regulation.
Analysis
The final rule is unchanged from the proposed rule that was
published on July 12, 1996.
Immediate Effective Date
Since the rule relieves a restriction in that the liquidating agent
can pay certain unposted dividends without specific NCUA Board action,
the thirty day delay in effective date is not applicable. 5 U.S.C.
553(d)(1).
Regulatory Procedures
Regulatory Flexibility Act
The NCUA Board certifies that this rule will not have a significant
economic impact on a substantial number of small credit unions (those
under $1 million in assets). Accordingly, a Regulatory Flexibility Act
analysis is not required.
Paperwork Reduction Act
The rule does not impose any new paperwork requirements.
Executive Order 12612
Executive Order 12612 requires NCUA to consider the effect of its
actions on state interests. The changes to Sec. 745.200 will apply to
both federal credit unions and federally-insured, state chartered
credit unions. The
[[Page 60186]]
NCUA Board, pursuant to Executive Order 12612, has determined that the
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 rule will not preempt provisions of state law
or regulation.
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 November
20, 1996.
Becky Baker,
Secretary of the Board.
Accordingly, NCUA amends 12 CFR part 745 as follows:
PART 745--SHARE INSURANCE AND APPENDIX
1. The authority citation for part 745 is revised 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 part. 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. 96-30287 Filed 11-26-96; 8:45 am]
BILLING CODE 7535-01-P