[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]


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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Chapter VII


Federal Credit Union Bylaws

AGENCY: National Credit Union Administration (NCUA).

ACTION: Request for comments.

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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\
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    \1\ 60 FR 58502 (November 28, 1995).
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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.
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    \2\ Revised 12/87.
    \3\ Revised 10/91.
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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.
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    \4\ An unpublished opinion, Madias v. Dearborn FCU, Civ. Act. 
No. 96-40043, (E.D. MI, So. Div. 1996).
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    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