[Federal Register Volume 62, Number 49 (Thursday, March 13, 1997)] [Proposed Rules] [Pages 11778-11779] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 97-6380] ----------------------------------------------------------------------- NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Chapter VII Federal Credit Union Bylaws AGENCY: National Credit Union Administration (NCUA). ACTION: Request for comments. ----------------------------------------------------------------------- SUMMARY: The NCUA Board proposes to revise and reorganize its Federal Credit Union Bylaws and Federal Credit Union Standard Bylaw Amendments in connection with its Regulation Review Program (Program). This proposal is one component of the Program to update and streamline NCUA regulations, focus regulations on key safety and soundness concerns and agency objectives, and eliminate requirements that impose inefficient and costly regulatory burdens on federally insured credit unions. The purpose of this notice is to solicit comments to help guide the preparation of a proposed rule which would clarify, revise and reorganize existing FCU Bylaws and eliminate bylaws that are obsolete. This notice presents only a general description of the bylaw changes being considered and includes no regulatory text. Comments will again be solicited when a proposed rule is issued with regulatory text. DATES: Comments must be received by May 12, 1997. ADDRESSES: Comments should be directed to Becky Baker, Secretary of the Board. Mail or hand-deliver comments to: National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428. Fax comments to (703) 518-6319. E-mail comments to [email protected]. Please send comments by one method only. FOR FURTHER INFORMATION CONTACT: Mary F. Rupp, Staff Attorney, Office of General Counsel, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428 or telephone: (703) 518-6540. SUPPLEMENTARY INFORMATION: Background Section 303 of the Riegle Community Development and Regulatory Improvement Act of 1994 (CDRI)(12 U.S.C. Sec. 4803(a)) requires the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Office of Thrift Supervision to review their regulations in order to streamline and modify their regulations to improve efficiency, reduce unnecessary costs, eliminate unwarranted constraints on credit availability and to work jointly to make uniform all regulations and guidelines implementing common statutory or supervisory policy. Although not statutorily mandated to engage in the review, the NCUA Board agrees with the policies and goals set forth in the CDRI and has voluntarily set up its own Program. The goal of the Program is to review all of the NCUA's rules and regulations to eliminate regulatory requirements that impose inefficient and costly regulatory burdens on federally insured credit unions, to eliminate requirements that do not contribute significantly to maintaining safety and soundness, and to revise rules that do not effectively advance the NCUA's other goals and statutory responsibilities. This review process will be ongoing. It began in 1995 with a complete revision of part 741, Requirements for Insurance.\1\ --------------------------------------------------------------------------- \1\ 60 FR 58502 (November 28, 1995). --------------------------------------------------------------------------- FCU Bylaws Section 108 of the FCU Act, 12 U.S.C. 1758, requires the NCUA Board to prepare bylaws which shall be used by all FCUs. Currently, the bylaws are approved by the NCUA Board and published in two manuals, Federal Credit Union Bylaws \2\ (FCU Bylaws) and Federal Credit Union Standard Bylaw Amendments and Guidelines \3\ (Standard Bylaw Amendments). The manuals are made available to FCUs upon request. The bylaws contained in the two manuals may be adopted by an FCU without approval from NCUA. An FCU must request approval to adopt a bylaw not contained in the manuals (nonstandard bylaw amendment) from its Regional Director. The Regional Director reviews all of the requests. After consulting with the other Regional Directors and the Office of General Counsel, the Regional Director advises the FCU whether its nonstandard bylaw amendment has been approved. As the requests for nonstandard amendments continue to increase, the process has become burdensome for FCUs and NCUA staff. --------------------------------------------------------------------------- \2\ Revised 12/87. \3\ Revised 10/91. --------------------------------------------------------------------------- Request for Comments There are several problems associated with the current FCU Bylaws and Standard Bylaw Amendments. Below is a general discussion of some of the problem areas and a request for comment. 1. FCU Bylaws and Standard Bylaw Amendments are not published in the Federal Register or codified in NCUA's Regulations. This is problematic for two reasons. First, the bylaws are not easily accessible to the general public, to the same extent as they would be if they were incorporated into NCUA's Regulations and published in the CFR. Second, a federal court \4\ held that NCUA's interpretation of its bylaws is accorded deference only if issued as a regulation. In order to ensure that its bylaws are enforceable, the Board is considering publishing them as a regulation. However, this would limit the Board's flexibility. Notice and comment rulemaking would be required to effect changes. The Board suggests a process where annually a proposal is submitted to the Board to adopt changes to the bylaws. The proposal will be based upon the requests received by the six Regions for bylaw amendments throughout the prior year. Under this model, there would no longer be nonstandard amendments. This may create a hardship for an FCU with unique circumstances. The Board is interested in receiving comments on alternative ways to deal with this issue. --------------------------------------------------------------------------- \4\ An unpublished opinion, Madias v. Dearborn FCU, Civ. Act. No. 96-40043, (E.D. MI, So. Div. 1996). --------------------------------------------------------------------------- 2. Permissible bylaws for FCUs are currently contained in two publications. In order to simplify the selection procedure for FCUs the Board believes that all FCU bylaws should be published in one place, either the regulations or one manual. It is envisioned that the revised bylaws will be more flexible by having more fill in the blanks, so that one bylaw can be modified to suit the needs of FCUs with vastly different operations. In the event alternative bylaws are necessary, they will be published side by side and an FCU will choose the one most suited to its operation. 3. Many of the current FCU Bylaws and Standard Bylaw Amendments are duplicative and outdated. The bylaws have not been thoroughly updated for many years. By eliminating unnecessary bylaws, NCUA hopes to reduce regulatory compliance costs. Some obvious examples of outdated or duplicative provisions that can be deleted are:Article III, Section 3--Delete the 6 month time requirement allowed to pay one share (outdated); [[Page 11779]] Article III, Section 4--Delete the $1 transfer fee (outdated); Article IV--Delete the reference to passbook accounts (outdated); Article XIII--Delete this section on reserves (duplicative of the regulations); and Article XX--Delete this section on operation following an attack on the United States (outdated). In conjunction with deleting the outdated provisions, NCUA is committed to ensuring that FCUs operate under state-of-the-art corporate governance procedures. Wherever possible, consistent with safety and soundness and fairness to members, we are seeking to move toward greater flexibility. Some of the areas that we have identified for modernization and flexibility are Article V, Meeting of Members; Article VI, Elections; Article VII, Board of Directors; and Article VIII, Board Officers, Management Officials and Executive Committee. Comments on how to modernize these provisions, as well as other areas in need of modernization, are requested. 4. Upon revision of the bylaws, should FCUs be required to adopt the revised FCU Bylaws? The Board is grappling with the issue of whether FCUs should be required to adopt the revised bylaws. On the one hand, the Board believes that consistent bylaws among FCUs is preferable. On the other hand, the Board recognizes that a complete revision of an FCU's bylaws may create a hardship for some FCUs. The Board requests comment on whether all FCUs should be required to adopt the new bylaws and if so, what would be a reasonable time-frame for compliance. The NCUA Board is seeking comments on all of the above mentioned possible means of simplifying and modernizing the bylaws, including the likely effect of such changes on the FCUs and their members. The Board is also seeking suggestions on any other ways that the bylaws might be streamlined, simplified and clarified. Based upon the comments, the Board will issue a proposed rule with proposed bylaws and another request for comments. Based upon those comments, the Board will issue a final rule. By the National Credit Union Administration Board on March 7, 1997. Becky Baker, Secretary of the Board. [FR Doc. 97-6380 Filed 3-12-97; 8:45 am] BILLING CODE 7535-01-P