[Federal Register Volume 69, Number 95 (Monday, May 17, 2004)]
[Rules and Regulations]
[Pages 27827-27829]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-11180]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Parts 701, 703, 709, 715, 723, and 725


Technical Corrections

AGENCY: National Credit Union Administration.

ACTION: Final rule.

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SUMMARY: The National Credit Union Administration (NCUA) Board is 
issuing a final technical corrections rule. The rule corrects cross-
references, updates references to NCUA publications, and makes minor 
typographic corrections.

DATES: This rule is effective May 17, 2004.

FOR FURTHER INFORMATION CONTACT: Paul Peterson, Staff Attorney, 
Division of Operations, Office of General Counsel, at the National 
Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 
22314-3428 or telephone: (703) 518-6540.

SUPPLEMENTARY INFORMATION:

A. Background

    The Board has a policy of continually reviewing NCUA regulations to 
``update, clarify and simplify existing regulations and eliminate 
redundant and unnecessary provisions.'' NCUA Interpretive Rulings and 
Policy Statement (IRPS) 87-2, Developing and Reviewing Government 
Regulations. The NCUA staff's most recent review of NCUA's regulations 
revealed the need for several minor updates and corrections.
    Section 701.21(i)(4) currently states that Federal credit unions 
must account for financial options contracts transactions in accordance 
with the NCUA Accounting Manual for Credit Unions, but the current 
version of the Accounting Manual does not address financial options 
contracts accounting. 12 CFR 701.21(i)(4). Accordingly, the Board 
amends Sec.  701.21(i)(4) to delete the reference to the Accounting 
Manual.
    Section 703.1(b)(6) contains an incorrect reference to Sec.  
741.3(a)(3). The correct reference should be to Sec.  741.3(a)(2). The 
Board amends Sec.  703.1(b)(6) to make this correction.
    Sections 709.1(c) and 725.18(c) contain incorrect references to 
Sec. Sec.  700.1(j) and 700.1(k), respectively. The correct references 
should both be to Sec.  700.2(e)(1). The Board amends Sec. Sec.  
709.1(c) and 725.18(c) to make this correction.
    In Sec.  715.3(a), the conjunction ``and'' that should be between 
the two subparagraphs (1) and (2) is incorrectly placed in the second 
subparagraph. The Board amends Sec.  715.3(a) to correct this.
    In the first sentence of Sec.  723.20(b), the phrase ``members 
business loan rule'' should be ``member business loan rule.'' In Sec.  
723.21, the capitalization of ``Net Member Business Loan Balance'' 
should be changed to ``Net member business loan balance'' to make it 
consistent with the format of the other definitions in that section. 
The Board amends Sec. Sec.  723.20(b) and 723.21 to make these changes.

B. Regulatory Procedures

Final Rule Under the Administrative Procedure Act

    The amendments in this rule are technical rather than substantive. 
NCUA finds good cause that notice and public comment are unnecessary 
under sec. 553(b)(B) of the Administrative Procedure Act (APA), 5 
U.S.C. 553(b)(B). NCUA also finds good cause to dispense with the 30-
day delayed effective date requirement under sec. 553(d)(3) of the APA. 
The rule will,

[[Page 27828]]

therefore, be effective immediately upon publication of this notice.

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact a rule may have on a 
substantial number of small entities (those credit unions under ten 
million dollars in assets). This rule 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 this rule will 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 rule 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 rule does not constitute a policy that has 
federalism implications for purposes of the executive order.

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

    The NCUA has determined that this 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).

List of Subjects

12 CFR Part 701

    Credit unions.

12 CFR Part 703

    Credit unions, Investments.

12 CFR Part 709

    Credit unions, Liquidations.

12 CFR Part 715

    Audits, Credit unions, Supervisory committees.

12 CFR Part 723

    Credit, Credit unions.

12 CFR Part 725

    Credit unions, Liquidity.

    By the National Credit Union Administration Board on May 11, 
2004.
Becky Baker,
Secretary of the Board.

0
Accordingly, the NCUA amends 12 CFR parts 701, 703, 709, 715, and 725 
as follows:

PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS

0
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.

0
2. Revise paragraph (i)(4) of Sec.  701.21 as follows:


Sec.  701.21  Loans to members and lines of credit to members.

* * * * *
    (i) * * *
    (4) Accounting. A federal credit union must account for financial 
options contracts transactions in accordance with generally accepted 
accounting principles.

PART 703--INVESTMENT AND DEPOSIT ACTIVITIES

0
3. The authority citation for part 703 continues to read as follows:

    Authority: 12 U.S.C. 1757(7), 1757(8), 1757(15).

0
4. Revise paragraph (b)(6) of Sec.  703.1 as follows:


Sec.  703.1  Purpose and scope.

* * * * *
    (b) * * *
    (6) Investment activity by State-chartered credit unions, except as 
provided in Sec.  741.3(a)(2) and Sec.  741.219 of this chapter.

0
5. Remove the last sentence of paragraph (a) of Sec.  703.4.

PART 709--INVOLUNTARY LIQUIDATION OF FEDERAL CREDIT UNIONS AND 
ADJUDICATION OF CREDITOR CLAIMS INVOLVING FEDERALLY INSURED CREDIT 
UNIONS IN LIQUIDATION

0
6. The authority citation for part 709 continues to read as follows:

    Authority: 12 U.S.C. 1757, 1766, 1767, 1786(h), 1787, 1788, 
1789, 1789a.


0
7. Revise paragraph (c) of Sec.  709.1 as follows:


Sec.  709.1  Definitions.

* * * * *
    (c) Insolvent means insolvent as that term is defined in Sec.  
700.1(e)(1) of this chapter.
* * * * *

PART 715--SUPERVISORY COMMITTEE AUDITS AND VERIFICATIONS

0
8. The authority citation for part 715 continues to read as follows:

    Authority: 12 U.S.C. 1761(b), 1761d, 1782(a)(6).


0
9. Revise paragraphs (a)(1) and (a)(2) of Sec.  715.3 as follows:


Sec.  715.3  General responsibilities of the Supervisory Committee.

    (a) * * *
    (1) Meet required financial reporting objectives and
    (2) Establish practices and procedures sufficient to safeguard 
members' assets.
* * * * *

PART 723--MEMBER BUSINESS LOANS

0
10. The authority citation for part 723 continues to read as follows:

    Authority: 12 U.S.C. 1756, 1757, 1757A, 1766, 1785, 1789.


0
11. Revise the first sentence of paragraph (b) of Sec.  723.20 as 
follows:


Sec.  723.20  How can a state supervisory authority develop and enforce 
a member business loan regulation?

* * * * *
    (b) To receive NCUA's approval of a state's member business loan 
rule, the state supervisory authority must submit its rule to the NCUA 
regional office. * * *
* * * * *

0
12. Revise the definition of ``Net Member Business Loan Balance'' in 
Sec.  723.21 as follows:


Sec.  723.21  Definitions.

* * * * *
    Net member business loan balance means the outstanding loan balance 
plus any unfunded commitments, reduced by any portion of the loan that 
is secured by shares in the credit union, or by shares or deposits in 
other financial institutions, or by a lien on the member's primary 
residence, or insured or guaranteed by any agency of the federal 
government, a state or any

[[Page 27829]]

political subdivision of such state, or subject to an advance 
commitment to purchase by any agency of the federal government, a state 
or any political subdivision of such state, or sold as a participation 
interest without recourse and qualifying for true sales accounting 
under generally accepted accounting principles.
* * * * *

PART 725--CENTRAL LIQUIDITY FACILITY

0
13. The authority citation for part 725 continues to read as follows:

    Authority: 12 U.S.C. 1795-1795f.


0
14. Revise the first sentence of paragraph (c) of Sec.  725.18 as 
follows:


Sec.  725.18  Creditworthiness.

* * * * *
    (c) Specific characteristics of an uncreditworthy credit union 
include, but are not limited to, insolvency as defined by Sec.  
700.2(e)(1) of this chapter, unsatisfactory practices in extending 
credit, lower than desirable reserve levels, high expense ratio, 
failure to repay previous Facility advances as agreed, excessive 
dependence on borrowed funds, inadequate cash management policies and 
planning, or any other relevant characteristics creating a less than 
satisfactory condition. * * *
* * * * *
[FR Doc. 04-11180 Filed 5-14-04; 8:45 am]
BILLING CODE 7535-01-P