[Federal Register Volume 64, Number 227 (Friday, November 26, 1999)]
[Rules and Regulations]
[Pages 66356-66360]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30692]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR PART 711
Management Official Interlocks
AGENCY: National Credit Union Administration.
ACTION: Final rule.
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SUMMARY: The National Credit Union Administration (NCUA) revises its
rule regarding management interlocks. The final rule conforms to recent
statutory changes, modernizes and clarifies the rule, and reduces
unnecessary regulatory burdens where feasible, consistent with
statutory requirements. The final rule was drafted through a
coordinated effort among the following other federal financial
regulatory agencies: the Comptroller of the Currency (OCC); Board of
Governors of the Federal Reserve System (Board); Federal Deposit
Insurance Corporation (FDIC); and Office of Thrift Supervision (OTS),
(collectively ``the banking agencies'').
EFFECTIVE DATE: This rule is effective January 1, 2000.
FOR FURTHER INFORMATION CONTACT: Dianne M. Salva, Staff Attorney,
Division of Operations, Office of General Counsel, at the National
Credit Union Administration, 1775 Duke Street, Alexandria, Virginia,
22314, or telephone: (703) 518-6540.
SUPPLEMENTARY INFORMATION:
I. Background
The Depository Institution Management Interlocks Act (12 U.S.C.
3201-3208) (the Interlocks Act) generally prohibits financial
institution management officials from serving simultaneously with two
unaffiliated depository institutions or their holding companies
(depository organizations). The Interlocks Act exempts interlocking
arrangements between credit unions and, therefore, in the case of
credit unions, only restricts interlocks between credit unions and
other institutions--banks and thrifts and their holding companies.
The scope of the prohibition depends on the size and location of
the involved organizations. For instance, the Interlocks Act prohibits
unaffiliated depository organizations, regardless of size, from
establishing an interlock if both organizations have an office in the
same community (the community prohibition). Unaffiliated depository
organizations may not form an interlock if both organizations have
total assets of $20 million or more and are located in the same
Relevant Metropolitan Statistical Area (RMSA) (the RMSA prohibition).
The Interlocks Act also prohibits unaffiliated depository
organizations, regardless of location, from establishing an interlock
if each organization has total assets exceeding specified thresholds
(the major assets prohibition).
Section 2210 of the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPR Act) amended Secs. 204, 206, and 209 of
the Interlocks Act (12 U.S.C. 3203, 3205 and 3207).\1\ Section 2210(a)
of the EGRPR Act amended the Interlocks Act by changing the thresholds
for the major assets prohibition under 12 U.S.C. 3203. Prior to the
EGRPR Act, management officials of depository organizations with total
assets exceeding $1 billion were prohibited from serving as management
officials of unaffiliated depository organizations with assets
exceeding $500 million, regardless of the location of the organizations
or their depository institution affiliates.\2\ The EGRPR Act raised the
thresholds to $2.5 billion and $1.5 billion, respectively. The revision
also authorized NCUA to adjust the thresholds by regulation, as
necessary to allow for inflation or market conditions.
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\1\ The OCC, the Board, the FDIC, and the OTS, (collectively,
the Agencies) recently published final rules similar to NCUA to
implement the EGRPR Act. 51673 (September 24, 1999).
\2\ The Agencies, and NCUA, define ``total assets'' of
diversified savings and loan holding companies and bank holding
companies exempt from Sec. 4 of the Bank Holding Company Act to
include only the assets of their depository institution affiliates.
See 12 CFR 26.2(r), 212.2(q), 348.2(q), 348.2(q), 711.2(r), and
563f.(r).
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Section 2210(b) of the EGRPR Act permanently extended the
grandfather and diversified savings and loan holding company exemptions
in 12 U.S.C. 3205. Prior to the EGRPR Act, these exemptions were
subject to a 20-year time limit beginning November 10,
[[Page 66357]]
1978. The EGRPR Act amended sec. 3205(a) to permit persons who began
dual service as management officials of more than one depository
organization before November 10, 1978, to continue such service
indefinitely. Similarly, sec. 3205(b) was amended to permit a person
who serves as a management official of a depository organization and of
a company that is not a depository holding company to continue to serve
as an official of both entities indefinitely if the non-depository
organization becomes a diversified savings and loan holding company.
The EGRPR Act also repealed sec. 3205(c). That provision, which
mandated agency review of grandfathered interlocks before March 1995,
became outdated.
The EGRPR Act also amended 12 U.S.C. 3207 to provide that NCUA may
adopt ``regulations that permit service by a management official that
would otherwise be prohibited by [the community, RMSA, or major assets
prohibitions], if such service would not result in a monopoly or
substantial lessening of competition.'' This change repealed the
specific ``regulatory standards'' and ``management consignment''
exemptions added by the Riegle Community Development and Regulatory
Improvement Act of 1994 (CDRI Act),\3\ and restored the NCUA's broad
authority to create regulatory exemptions to the statutory prohibitions
on interlocks.
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\3\ NCUA adopted final regulations implementing the management
interlocks provision of the CDRI Act, effective October 1, 1996. See
61 FR 50702, September 27, 1996. The banking agencies also adopted
final regulations implementing the management interlocks provisions
of the CDRI Act, effective October 1, 1996. See 61 FR 40293. August
2, 1996.
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II. The Proposal
On October 29, 1998, NCUA published a notice of proposed rulemaking
(the proposal) to implement these statutory changes. 63 FR 57945,
October 29, 1998. The proposal also renewed an earlier proposal for a
small market share exemption that had been advanced by the FRB, OCC and
FDIC before enactment of the CDRI Act.
III. The Final Rule and Comments Received
NCUA received four comments, all in favor of the proposal. Several
commenters emphasized the importance of coordination among NCUA and the
banking agencies. Most of the proposed changes received either no
comments or uniformly favorable comments. Accordingly, NCUA has adopted
the proposal with only one minor change. The following discussion
summarizes the amendments to NCUA's management interlocks rule and the
comments received.
A. Definitions
Current NCUA regulations define key terms implementing the
Interlocks Act. A number of these definitions were added or revised in
1996 to implement the CDRI Act. With the repeal of the specific
exemptive standards in the CDRI Act, two of these definitions have
become unnecessary and can be removed. NCUA received no comments on the
proposed elimination of these terms and therefore adopts this provision
as proposed.
B. Major Assets Prohibition
Prior to the EGRPR Act, a management official of a depository
organization (or its affiliates) having total assets exceeding $1
billion could not serve as a management official of any depository
organization with total assets exceeding $500 million (or its
affiliates) regardless of location. The EGRPR Act revised the asset
thresholds for the major assets prohibition from $1 billion and $500
million to $2.5 billion and $1.5 billion, respectively. The legislation
also authorized the NCUA to adjust the threshold from time to time to
reflect inflation or market changes.
NCUA proposed to amend the regulations to reflect the new threshold
amounts, and to add a mechanism providing for periodic adjustments of
the thresholds. The adjustment would be based on changes in the
Consumer Price Index for Urban Wage Earners and Clerical Workers (the
Consumer Price Index). In years when changes in the Consumer Price
Index would change the thresholds by more than $100 million, NCUA,
along with the banking agencies, will announce the change by a final
rule without notice or opportunity for comment published in the Federal
Register. For those years in which changes in the Consumer Price Index
would not change the thresholds by more than $100 million, NCUA and the
banking agencies will not adjust the threshold. NCUA, however, wishes
to clarify that if the threshold is not adjusted to reflect a Consumer
Price Index change in any given year, the change for that year will be
considered in computing adjustments to the threshold in subsequent
years. NCUA also invited comment on the types of market changes that
may warrant subsequent adjustments to the major assets prohibition.
One commenter expressed support for the proposal to periodically
adjust the thresholds based on the Consumer Price Index, but admonished
NCUA to coordinate any changes with the banking agencies to ensure that
all supervisory agencies are using a consistent standard. NCUA agrees
that such coordination among it and the banking agencies will ensure
consistency in the standard. NCUA intends to coordinate with the
banking agencies on such adjustments, just as it has coordinated these
changes to the rule. Accordingly, NCUA adopts the mechanism providing
for periodic adjustments of the thresholds set forth in the proposal
without any changes.
C. Regulatory Standards and Management Consignment Exemptions
The current regulations contain Regulatory Standards and Management
Consignment exemptions which were predicated on sec. 3207 of the
Interlocks Act. The EGRPR Act removed the specific exemptions from the
Interlocks Act and substituted a general authority for the Agencies to
create exemptions by regulation. Accordingly, the proposal recommended
removal of these regulatory exemptions. NCUA received no comment on
this provision. NCUA finds the removal of the exemptions appropriate in
light of their statutory repeal and therefore adopt this provision as
set forth in the proposal without any changes.
D. General Exemptive Authority
Section 2210(c) of the EGRPR Act authorizes NCUA to adopt
regulations permitting service by a management official that would
otherwise be prohibited by the Interlocks Act, if such service would
not result in ``a monopoly or substantial lessening of competition.''
To implement this authority, NCUA proposed to exempt otherwise
prohibited management interlocks where the dual service would not
result in a monopoly or substantial lessening of competition and would
not otherwise threaten safety and soundness. The process for obtaining
such exemptions will be set out in an NCUA directive to credit unions.
Since 1979, when regulations implementing the Interlocks Act were
first promulgated, NCUA has recognized that interlocks involving
certain classes of depository organizations present a reduced risk to
competition, and that, by enlarging the pool of management available to
such organizations, competition could be enhanced. Thus, in the initial
interlocks rules published in 1979, NCUA reserved the authority to
permit interlocks to strengthen newly-chartered organizations, troubled
organizations, organizations in low- or moderate-income areas and
organizations controlled or managed by
[[Page 66358]]
minorities or women. The authority to permit interlocks in such
circumstances was deemed ``necessary for the promotion of competition
over the long term.'' See 44 FR 42161, 42165 (July 19, 1979). Prior to
the CDRI Act, these exemptions were granted to meet the need for
qualified management. The Management Consignment exemption under the
CDRI Act was generally available to the same four classes of
organizations, but on a more limited basis.
With the EGRPR Act's restoration of the broad exemptive authority
under the Interlocks Act, NCUA again has authority to grant exemptions
that will not adversely affect competition. NCUA believes that
interlocks involving the four classes of organizations previously
identified may provide management expertise needed to enhance the
ability of the organizations to compete. Accordingly, NCUA proposed to
establish a rebuttable presumption that an interlock would not result
in a monopoly or substantial lessening of competition, if: (1) The
depository organization is located in, and primarily serves, low-or
moderate-income areas; (2) the depository organization is controlled or
managed by members of a minority group or women; (3) the depository
institution is newly-chartered; or (4) the depository institution, or
in the case of a depository organization, a depository institution
under its control, is deemed to be in ``troubled condition'' under
regulations implementing sec. 914 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (FIRREA). 12 U.S.C. 1831i.
A claim that factors exist giving rise to a presumption does not
preclude NCUA from denying a request for an exemption if NCUA finds,
based on available materials, that the presumption is rebutted. That
is, an exemption request may be denied if NCUA determines that the
interlock would result in a monopoly or substantial lessening of
competition. The presumptions are designed to provide greater
flexibility to classes of organizations that may have greater need for
seasoned management, but the presumptions are rebuttable because NCUA
recognizes that such needs can only be met in a manner that is
consistent with the statute.
The definitions of ``area median income'' and ``low- and moderate-
income areas'' added to the regulations in 1996 to implement the CDRI
Act amendments are being retained to provide guidance as to when an
organization would qualify for one of the presumptions. Interlocks that
are based on the presence of a rebuttable presumption would be allowed
to continue for three years, unless otherwise provided in the approval
order. Nothing in the proposed rule would prevent an organization from
applying for an extension of an interlock exemption granted under a
presumption if the factors continued to apply. The organizations would
also be free to utilize any other exemption that may be available.
NCUA also proposed that any other interlock approved under this
section be allowed to continue unless it becomes anticompetitive,
unsafe or unsound, or is subject to a condition requiring termination
at a specific time.
One commenter supported the general exemption and stated that the
presumptions in the proposal were suitable, but cautioned that any
request for an interlock extension beyond three years should be closely
scrutinized. NCUA recognizes that the permitted interlocks are
exceptions to the rule and will assess the need for such service on a
case-by-case basis. NCUA is adopting the proposed section with no
changes.
E. Small Market Share Exemption
In 1994, the OCC, FDIC, and FRB published notices of proposed
rulemaking seeking comment on a proposed market share exemption. The
proposed exemption would have been available for interlocks involving
institutions that, on a combined basis, would control less than 20% of
the deposits in a community or relevant MSA. These agencies published
small market share exemption proposals pursuant to the broad exemptive
authority vested in the agencies prior to the CDRI Act. Because the
CDRI Act restricted the agencies' broad rulemaking authority, the OCC,
FDIC, and FRB withdrew their proposals.\4\ The broad exemptive
authority under the EGRPR Act again authorizes the small market share
exemption. Accordingly, NCUA joins the banking agencies in renewing the
proposal for the small market share exemption.
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\4\ See OCC, 59 FR 29740 (June 9, 1994), FDIC, 59 FR 18764
(April 20, 1994), and FRB, 59 FR 7909 (February 17, 1994) for
proposals prior to CDRI Act. Following enactment of the CDRI Act
these proposals were withdrawn; 60 FR 67424 (December 29, 1995) for
withdrawal by OCC and FRB; and 60 FR 7139 (February 7, 1995) for
withdrawal by the FDIC.
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The Interlocks Act, by discouraging common management among
financial institutions, seeks to prevent unaffiliated institutions from
having an adverse impact on competition in the products and services
they offer. Where depository institutions dominate a large portion of
the market, these risks are significant. When a particular market is
served by many institutions, however, the risks diminish that
depository institutions with interlocking relationships can adversely
affect the products and services available in their markets.
NCUA's proposal stated that the combination of the shares and
deposits of two institutions would provide a meaningful assessment of
the capacity of the two institutions to control credit and related
services in their market. Accordingly, NCUA proposed to exempt
interlocking service involving two unaffiliated depository
organizations that together control no more than 20% of the shares and
deposits in any RMSA or community, as appropriate. Organizations
claiming the exemption would be required to determine the market share
in each RMSA and community in which both depository organizations (or
affiliates) are located. Under the proposal, to determine their
eligibility for the exemption, depository organizations would need to
obtain appropriate share and deposit data from NCUA and appropriate
deposit data from the FDIC.
NCUA received two comments in support of the small market share
exemption, one emphasizing that the rule must conform to that of the
other banking agencies and another emphasizing the importance that
deposits in all insured financial institutions, banks, thrifts and
credit unions, be included in the calculation. The banking agencies
proposed that depository organizations rely only on bank and thrift
data collected by the FDIC in its Summary of Deposits to determine
eligibility for the small market share exemption. NCUA proposed that
the bank and thrift data from the Summary of Deposits be combined with
credit union data from NCUA to calculate total assets in a given market
and market share. Both the Summary of Deposits, and the NCUA data are
readily accessible on the Internet and each permits the user to search
for deposit and asset data by city, state and zip code. However, the
FDIC database reports deposit and asset information by an institution's
branch location, while NCUA's database does not. NCUA does not collect
information from credit unions on a branch by branch basis; rather it
attributes all share, deposit and asset information to a credit union's
main branch. If credit union data were included in the calculation of
total assets in a community, the figure may be inaccurate. For example,
in a community where the main branch of a
[[Page 66359]]
large credit union is located, the credit union assets would
artificially inflate the market calculations. At the same time, the
calculations in a nearby community where the large credit union has a
branch location would be artificially low.
The banking agencies believe that the deposit data maintained in
the FDIC's Summary of Deposits provides a reliable approximation of the
market for a given location. NCUA agrees. To the extent that credit
unions hold a significant amount of the total deposits in a given
market, this information may be used to demonstrate that an interlock
will not result in a monopoly or substantial lessening of competition
under the general exemption. This approach is consistent with the
banking agencies' treatment of credit union shares in the merger
context, where the banking agencies consider credit union shares as one
of many mitigating factors if a merger transaction exceeds a specified
threshold. Accordingly, for the sake of consistency and to permit all
depository organizations to use a more accurate method of calculating
market share, in the final rule, NCUA has eliminated the requirement
that credit union shares be included in the calculation of market
share, and instead permits the reliance on the Summary of Deposits data
only. Organizations claiming the exemption must determine the market
share in each RMSA and community in which both depository organizations
(or their depository institution affiliates) have offices. The relevant
market used for the small market share exception (that is, the RMSAs or
communities in which both depository organizations or their depository
institution affiliates have offices) are the same markets described in
the community and RMSA prohibitions. The small market share exemption
is not available for interlocks subject to the major assets
prohibition.
The small market share exemption would continue to apply as long as
the organizations meet the applicable conditions. Any event that causes
the level of deposits controlled to exceed 20% of deposits in any RMSA
or community, such as expansion or a merger, would be considered to be
a change in circumstances. Accordingly, the depository organizations
would have 15 months, under NCUA's regulation, to address the
prohibited interlock by termination or otherwise. The agency with
jurisdiction over the organization may establish a shorter period.
Conforming changes relating to termination have been made to NCUA's
change of circumstances provisions. The small market share exemption is
not available for interlocks subject to the major assets prohibition.
No prior NCUA approval would be required in order to claim the
proposed small market share exemption. Management is responsible for
compliance with the terms of the exemption and for maintaining
sufficient supporting documentation.
The most recently available deposit data will be used to determine
whether organizations are entitled to the exemptions. FDIC publishes
its deposit total information annually. A credit union seeking the
exception is entitled to rely upon the deposit data that has been
compiled for the previous year, until more recent data has been
distributed.
F. General Comments
One commenter expressed concern that even though a management
official interlock between two credit union is exempt under the
Interlocks Act, credit unions should be made aware that a conflict may
arise when a management official serves two credit unions. NCUA
recognizes that dual service to two or more credit unions could pose a
conflict and reminds credit unions that they may choose to adopt a
policy addressing the issue.
G. Effective Date of the Final Rule
The banking agencies set the effective date of their joint final
rule on January 1, 2000, in accordance with 12 U.S.C. 4802(b). Although
NCUA is not subject to 12 U.S.C. 4802(b), in order to simplify
compliance with the rule, NCUA has adopted the same effective date.
Compliance with the final rule is not mandatory until the effective
date. Section 4802(b), however, also permits any person subject to the
regulation to comply with the regulation voluntarily, prior to the
effective date. To the extent that a credit union and bank desire to
comply voluntarily with the final rule, they may elect to do so
immediately. If a depository institution elects to comply voluntarily
with any section of the management interlocks rule, it must comply with
the entire part.
Paperwork Reduction Act
NCUA may not conduct or sponsor, and an organization is not
required to respond to, an information collection unless it displays a
currently valid OMB control number. The OMB control number is 3133-
0152. NCUA sought comment on the burden estimates for the information
collections listed below and received no comments that specifically
addressed the burden stemming from these information collections. The
collections of information contained in this final rule have been
reviewed and approved by the Office of Management and Budget under
control number 3604-0118 in accordance with the Paperwork Reduction Act
of 1995 (44 U.S.C. 3507). Comments on the collections of information
should be sent to the Office of Management and Budget, Paperwork
Reduction Project (3604-0118), Washington, D.C. 20503, with copies of
such comments to be sent to NCUA, 1775 Duke Street, Alexandria, VA
22314, Attention: James L. Baylen, Paperwork Reduction Act Coordinator,
Telephone No. (703) 518-6410; Fax No. (703) 518-6433; E-Mail address:
[email protected].
The collection of information requirements in this proposed rule
are found in 12 CFR 711.4(h)(1)(i), 711.5(a)(1), 711.5(a)(2), 711.5(b),
711.6(a), and 711.6(c). This information is required to evidence
compliance with the requirements of the Interlocks Act by federal
credit unions and federally insured, state-chartered credit unions. The
likely respondents are federal credit unions and federally insured,
state-chartered credit unions. In the past several years, NCUA has
received approximately one management interlock application each year.
The following estimates are provided:
Estimated average annual burden hours per respondent: 3 hours.
Estimated number of respondents: 1.
Start-up costs to respondents: None.
No issues of confidentiality under the provisions of the Freedom of
Information Act normally arise for the applications.
Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act (RFA)
(5 U.S.C. 605(b)), NCUA hereby certifies that this rule will not have a
significant economic impact on a substantial number of small entities.
NCUA expects that this rule will not: (1) have significant secondary or
incidental effects on a substantial number of small entities; or (2)
create any additional burden on small entities. These conclusions are
based on the fact that the regulations relax the criteria for obtaining
an exemption from the interlocks prohibitions, and specifically address
the needs of small entities by creating the small market share
exemption. Accordingly, a regulatory flexibility analysis is not
required.
Executive Order 12866
The NCUA Board has determined that this proposal is not a
significant regulatory action under Executive Order 12866.
[[Page 66360]]
Executive Order 12612
Executive Order 12612 requires NCUA to consider the effect of its
actions on state interests. The final rule, just as the current rule,
applies to all federally insured credit unions, including federally
insured state-chartered credit unions. However, since the rule reduces
regulatory burdens, NCUA has determined that it does not constitute a
``significant regulatory action'' for purposes of the Executive Order.
Small Business Regulatory Enforcement Fairness Act
The Office of Management and Budget is reviewing this rule to
determine that it is not major for purposes of the Small Business
Regulatory Enforcement Fairness Act of 1996.
List of Subjects in 12 CFR Part 711
Antitrust, Credit unions, Holding companies, Management official
interlocks.
By the National Credit Union Administration Board on November
18, 1999.
Becky Baker,
Secretary of the Board.
For the reasons set out in the preamble, the NCUA amends 12 CFR
part 711 as follows:
PART 711--MANAGEMENT OFFICIAL INTERLOCKS
1. The authority citation for Part 711 continues to read as
follows:
Authority: 12 U.S.C. 3201-3208.
Sec. 711.2 [Amended]
1. Section 711.2 is amended by removing paragraphs (b) and (f) and
redesignating paragraphs (c) through (s) as paragraphs (b) through (q),
respectively.
2. Section 711.3 is amended by revising paragraph (c) to read as
follows:
Sec. 711.3 Prohibitions.
* * * * *
(c) Major Assets. A management official of a depository
organization with total assets exceeding $2.5 billion (or any affiliate
thereof) may not serve at the same time as a management official of an
unaffiliated depository organization with total assets exceeding $1.5
billion (or any affiliate thereof), regardless of the location of the
two depository organizations. The NCUA will adjust these thresholds, as
necessary, based on year-to-year change in the average of the Consumer
Price Index for the Urban Wage Earners and Clerical Workers, not
seasonally adjusted, with rounding to the nearest $100 million. The
NCUA will announce the revised thresholds by publishing a notice in the
Federal Register.
3. Section 711.5 is revised to read as follows:
Sec. 711.5 Small market share exemption.
(a) Exemption. A management interlock that is prohibited by
Sec. 711.3(a) or Sec. 711.3(b) is permissible, provided:
(1) The interlock is not prohibited by Sec. 711.3(c); and
(2) The depository organizations (and their depository institution
affiliates) hold, in the aggregate, no more than 20% of the deposits,
in each RMSA or community in which the depository organizations (or
their depository institution affiliates) are located. The amount of
deposits will be determined by reference to the most recent annual
Summary of Deposits published by the FDIC. This information is
available on the Internet at http://www.fdic.gov.
(b) Confirmation and records. Each depository organization must
maintain records sufficient to support its determination of eligibility
for the exemption under paragraph (a) of this section, and must
reconfirm that determination on an annual basis.
4. Section 711.6 is revised to read as follows:
Sec. 711.6 General exemption.
(a) Exemption. NCUA may, by agency order issued following receipt
of an application, exempt an interlock from the prohibitions in
Sec. 711.3, if NCUA finds that the interlock would not result in a
monopoly or substantial lessening of competition, and would not present
other safety and soundness concerns.
(b) Presumptions. In reviewing applications for an exemption under
this section, NCUA will apply a rebuttable presumption that an
interlock will not result in a monopoly or substantial lessening of
competition if the depository organization seeking to add a management
official:
(1) Primarily serves, low- and moderate-income areas;
(2) Is controlled or managed by persons who are members of a
minority group or women;
(3) Is a depository institution that has been chartered for less
than two years; or
(4) Is deemed to be in ``troubled condition'' as defined in
Sec. 701.14(b)(3) of this chapter.
(c) Duration. Unless a shorter expiration period is provided in the
NCUA approval, an exemption permitted by paragraph (a) of this section
may continue so long as it would not result in a monopoly or
substantial lessening of competition, or be unsafe or unsound. If the
NCUA grants an interlock exemption in reliance upon a presumption under
paragraph (b) of this section, the interlock may continue for three
years, unless otherwise provided in the approval.
5. Section 711.7 is amended by revising paragraph (a) to read as
follows:
Sec. 711.7 Change in circumstances.
(a) Termination. A management official shall terminate his or her
service if a change in circumstances causes the service to become
prohibited. A change in circumstances may include, but is not limited
to, an increase in asset size of an organization, a change in the
delineation of the RMSA or community, the establishment of an office,
an increase in the aggregate deposits of the depository organization,
or an acquisition, merger, consolidation, or reorganization of the
ownership structure of a depository organization that causes a
previously permissible interlock to become prohibited.
* * * * *
[FR Doc. 99-30692 Filed 11-24-99; 8:45 am]
BILLING CODE 7535-01-P