[Federal Register Volume 66, Number 36 (Thursday, February 22, 2001)]
[Proposed Rules]
[Pages 11125-11126]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-4362]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 66, No. 36 / Thursday, February 22, 2001 / 
Proposed Rules  

[[Page 11125]]



NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 712


Credit Union Service Organizations (CUSOs)

AGENCY: National Credit Union Administration (NCUA).

ACTION: Proposed rule.

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SUMMARY: NCUA proposes two changes to its rule concerning federal 
credit union (FCU) investments in and loans to credit union service 
organizations (CUSOs). The first proposed change clarifies that the 
list of permissible activities in the CUSO regulation is intended to 
establish broad categories of permissible activities. The listing of 
particular activities under these categories is meant to be 
illustrative not exhaustive of activities that may be permissible. In 
conjunction with this change, the provision for adding new activities 
to the regulation is amended to encourage FCUs to seek an advisory 
opinion from the Office of General Counsel on whether a proposed 
activity falls within one of the authorized categories before 
requesting a regulatory amendment. The second proposed change adds a 
federally-chartered corporation to the category of permissible 
structures for CUSOs.

DATES: Comments must be received on or before April 23, 2001.

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 Rupp, Staff Attorney, Office of 
General Counsel, at the above address or telephone (703) 518-6540.

SUPPLEMENTARY INFORMATION:

Proposed Changes

    The NCUA Board proposes revising Sec. 712.5, the provision 
governing permissible CUSO activities. Currently, this section lists 17 
broad categories of permissible activities and, within many of these 
categories, there are several subcategories. Questions have arisen from 
time to time about whether an activity that is not specifically listed 
is permissible. The Board's intent is that the listings under the broad 
categories are for illustrative purposes. The Board proposes revising 
Sec. 712.5 to state this plainly. In conjunction with that change, the 
Board proposes amending the provision for adding new activities to the 
regulation to advise FCUs to seek an advisory opinion from the Office 
of General Counsel as to whether a proposed activity fits into one of 
the authorized categories before requesting a regulatory change to add 
a new activity.
    These amendments will reduce regulatory burden by allowing the rule 
to expand as technology expands. In a previous rulemaking, the Board 
took this same approach with respect to the permissible activity 
``cyber financial services.'' 12 CFR 712.5(d)(8). With respect to that 
activity, the Board agreed with the commenters and rejected listing 
specific permissible services because ``it would be too limiting and, 
with changing technology, would rapidly become outdated.'' 64 FR 33184, 
33185 (June 22, 1999).
    The second proposed change concerns the structure of a CUSO formed 
as a corporation. The rule limits a CUSO structured as a corporation to 
a ``corporation as established and maintained under relevant state 
law.'' 12 CFR 712.3(a). At the time the rule was drafted, that was the 
only type of corporate structure envisioned for a CUSO falling within 
one of the permissible activities. It has since been brought to the 
Board's attention that a CUSO engaging in permissible trust activities 
may wish to be chartered as a national trust company. The Federal 
Credit Union Act does not prohibit this structure if the trust company 
is not a depository institution. Therefore, the Board is revising the 
rule to include federally-chartered corporations. The Board cautions 
FCUs that there are specific prohibitions against using the CUSO 
authority to acquire control either directly or indirectly over other 
depository institutions. 12 U.S.C. 1757(7)(I); 12 CFR 712.6.

Request for Comment

    The NCUA Board is interested in receiving comments on the proposed 
amendments to part 712.
    The NCUA Board is also interested in receiving comment on whether 
the categories listed in Sec. 712.5 are sufficiently broad to cover all 
activities and services that relate to the routine daily operations of 
credit unions.

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 proposed amendments will not have a significant 
economic impact on a substantial number of small credit unions and, 
therefore, a regulatory flexibility analysis is not required.

Paperwork Reduction Act

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

Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. In 
adherence to fundamental federalism principles, NCUA, an independent 
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies 
with the executive order. This proposed rule, if adopted, will apply 
only to federally-chartered credit unions. It will not have substantial 
direct effects 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. NCUA has 
determined that this proposal does not constitute a policy that has 
federalism implications for purposes of the executive order.

[[Page 11126]]

The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    The NCUA has determined that this proposed rule will not affect 
family well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 
2681 (1998).

Agency Regulatory Goal

    NCUA's goal is to promulgate clear and understandable regulations 
that impose minimal regulatory burden. We request your comments on 
whether the proposed rule is understandable and minimally intrusive if 
implemented as proposed.

List of Subjects in 12 CFR Part 712

    Administrative practices and procedure, Credit, Credit unions, 
Investments, Reporting and record keeping requirements.

    By the National Credit Union Administration Board on February 
15, 2001.
Becky Baker,
Secretary of the Board.

Proposed Rule

    Accordingly, NCUA proposes to amend 12 CFR part 712 as follows:

PART 712--CREDIT UNION SERVICE ORGANIZATIONS (CUSOs)

    1. The authority citation for part 712 continues to read as 
follows:

    Authority: 12 U.S.C. 1756, 1757(5)(D), and (7)(I), 1766, 1782, 
1784, 1785 and 1786.

    2. Amend Sec. 712.3 by revising the third sentence of paragraph (a) 
to read as follows:


Sec. 712.3  What are the characteristics of and what requirements apply 
to CUSOs?

    (a) Structure. * * * For purposes of this part, ``corporation'' 
means a legally incorporated corporation as established and maintained 
under relevant federal or state law. * * *
* * * * *
    4. Amend Sec. 712.5 by revising the second sentence and adding a 
third sentence to the introductory paragraph to read as follows:


Sec. 712.5  What activities and services are preapproved for CUSOs?

    * * * Otherwise, an FCU may invest in, loan to, and/or contract 
with only those CUSOs that are sufficiently bonded or insured for their 
specific operations and engaged in the preapproved activities and 
services related to the routine daily operations of credit unions. The 
specific activities listed within each preapproved category are 
provided in this section as illustrations of activities permissible 
under the particular category, not as an exclusive or exhaustive list.
* * * * *
    5. Add a sentence to the end of Sec. 712.7 to read as follows:


Sec. 712.7  What must an FCU do to add activities or services that are 
not preapproved?

    * * * Before you engage in the petition process, you should seek an 
advisory opinion from NCUA's Office of General Counsel as to whether a 
proposed activity is already covered by one of the authorized 
categories without filing a petition to amend the regulation.

[FR Doc. 01-4362 Filed 2-21-01; 8:45 am]
BILLING CODE 7535-01-U