[Federal Register Volume 63, Number 209 (Thursday, October 29, 1998)]
[Proposed Rules]
[Pages 57942-57943]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28878]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 701


Organization and Operations of Federal Credit Unions

AGENCY: National Credit Union Administration (NCUA).

ACTION: Notice of proposed rulemaking and request for comments.

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SUMMARY: The NCUA is proposing to incorporate into its regulations the 
agency's longstanding interpretation that federal credit unions (FCUs) 
are authorized, within limits, to make charitable contributions and 
donations. NCUA seeks to increase regulatory effectiveness by making it 
easier for FCUs to locate applicable rules regarding the making of 
charitable contributions and donations. NCUA seeks to increase 
regulatory effectiveness by making it easier for FCUs to locate 
applicable rules regarding the making of charitable contributions and 
donations.

DATES: Comments must be received on or before January 27, 1999.

ADDRESSES: Direct comments 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. Please send comments by one method only.

FOR FURTHER INFORMATION CONTACT: Frank S. Kressman, Staff Attorney, 
Division of Operations, Office of General Counsel, at the above address 
or telephone:
    (703) 518-6540.

SUPPLEMENTARY INFORMATION:
    NCUA has a policy of continually reviewing its regulations to 
``update, clarify and simplify existing regulations and eliminate 
redundant and unnecessary provisions.'' Interpretive Rulings and Policy 
Statements (IRPS) 87-2, Developing and Reviewing Government 
Regulations. As part of this regulatory review program, NCUA also 
reviews its IRPS to determine their current effectiveness.
    NCUA issued IRPS 79-6 to clarify its position on FCUs making 
charitable contributions and donations. 44 FR 56691 (October 2, 1979). 
In IRPS 79-6, NCUA acknowledged the benefits associated with FCUs 
making charitable contributions and donations. Also, NCUA stated that 
the making of charitable contributions and donations is an activity 
incidental to an FCU's business within the scope of powers set forth in 
the Federal Credit Union Act. 12 U.S.C. 1757(17).
    As a result of the review of IRPS 79-6, NCUA seeks to increase 
regulatory effectiveness by making it easier for FCUs to locate 
applicable rules regarding the making of charitable contributions and 
donations. Accordingly, NCUA is proposing to add a new Sec. 701.25 that 
will incorporate the policies of IRPS 79-6 into NCUA regulations. This 
new rule will be located in part 701 so it will be in the same place as 
other regulatory provisions regarding the organization and operations 
of FCUs. The language of the new rule is somewhat different from that 
of the IRPS, but the rationale and limitations are the same.
    This proposal addresses charitable contributions and donations only 
and does not include political contributions and donations of FCUs, 
which are governed by the Federal Election Campaign Act (2 U.S.C. 
441b). Additionally, all charitable contributions and donations by FCUs 
must be made in accordance with applicable Federal Credit Union Bylaws 
including those addressing conflicts of interest and FCU board of 
directors meetings. FCU Bylaws Art. XIX, Sec. 4 and Art. VIII, Sec. 8. 
Finally, NCUA intends that an FCU's board of directors, if it chooses, 
can establish a budget for charitable contributions and donations and 
authorize an executive committee of directors or appropriate FCU senior 
officials to disburse those funds in accordance with the proposal.

Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact any proposed regulation may 
have on a substantial number of small entities (primarily those under 
$1 million in assets). The NCUA has determined and certifies that the 
proposed amendment, if adopted, will not have a significant economic 
impact on a substantial number of small credit unions. Accordingly, the 
NCUA has determined that a Regulatory Flexibility Analysis is not 
required.

Paperwork Reduction Act

    NCUA has determined that the proposed amendments do not increase 
paperwork requirements under the Paperwork Reduction Act of 1995 and 
regulations of the Office of Management and Budget. .

Executive Order 12612

    Executive Order 12612 requires NCUA to consider the effect of its 
actions on state interests. The proposal only applies to federal credit 
unions. NCUA has determined that the proposed amendment does not 
constitute a significant regulatory action for purposes of Executive 
Order 12612.

List of Subjects in 12 CFR Part 701

    Charitable contributions, Credit unions.
    By the National Credit Union Administration Board on October 22, 
1998.
Becky Baker,
Secretary of the Board.
    For the reasons set forth in the preamble, it is proposed that 12 
CFR part 701 be amended as follows:

PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS

    1. The authority citation for part 701 continues to read as 
follows:

    Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1759, 1761a, 
1761b, 1766, 1767, 1782, 1784, 1787, and 1789. Section 701.6 is also 
authorized by 31 U.S.C. 3717. Section 701.31 is also authorized by 
15 U.S.C. 1601 et seq., 42 U.S.C. 1861 and 42 U.S.C. 3601-3610. 
Section 701.35 is also authorized by 42 U.S.C. 4311-4312.
    2. Part 701 is amended by adding Sec. 701.25 to read as follows:


Sec. 701.25  Charitable contributions and donations.

    (a) A federal credit union may make charitable contributions and/or 
donate funds only to:
    (1) An organization that is a tax exempt organization under Section 
501(c)(3) of the Internal Revenue Code and is located in or conducts 
its activities in a community in which the federal credit union has a 
principal place of business; or
    (2) An organization that is a tax exempt organization under Section 
501(c)(3) of the Internal Revenue Code

[[Page 57943]]

and operates primarily to promote and develop credit unions.
    (b) The board of directors must approve charitable contributions 
and/or donations, and the approval must be based on a determination by 
the board of directors that the contributions and/or donations are in 
the best interests of the credit union and are reasonable given the 
financial condition of the credit union.
[FR Doc. 98-28878 Filed 10-28-98; 8:45 am]
BILLING CODE 7535-01-U