[Federal Register Volume 71, Number 225 (Wednesday, November 22, 2006)]
[Rules and Regulations]
[Pages 67436-67439]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-19682]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 740

RIN 3133-AD18


Revisions to the Official Sign Indicating Insured Status

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: NCUA is revising the official sign indicating a credit union's 
share accounts are insured by the NCUA to reflect recent share 
insurance increases and by including a statement that NCUA-insured 
share accounts are backed by the full faith and credit of the United 
States Government. This rule is required to comply with the Federal 
Deposit Insurance Reform Act of 2005 (Reform Act) and the Federal 
Deposit Insurance Reform Conforming Amendments Act of 2005 (Conforming 
Amendments Act).

DATES: This final rule is effective immediately upon publication but 
there are delayed compliance dates. A credit union must replace the old 
version of the official sign with the revised official sign displayed 
below at required locations such as each station or window where the 
credit union normally receives insured funds or deposits in its 
principal place of business and all of its branches and on its internet 
page where it accepts deposits or opens accounts by May 22, 2007. A 
credit union must replace the old version of the official sign with the 
revised official sign on each document where it has chosen to include 
the

[[Page 67437]]

official sign, including advertisements, marketing and promotional 
materials, disclosures, and others by November 23, 2007.

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

SUPPLEMENTARY INFORMATION: 

A. Background

    The Reform Act and Conforming Amendments Act, respectively Public 
Law 109-171 and Public Law 109-173, amended the share insurance 
provisions of the Federal Credit Union Act in a number of ways, 
including increasing share insurance coverage for certain accounts. 12 
U.S.C. 1781-1790d. In March 2006, NCUA issued an interim final rule to 
implement many of those statutory amendments. 71 FR 14631 (March 23, 
2006). Additionally, the Conforming Amendments Act also requires that 
NCUA's official sign, relating to the insurance of share accounts, 
state that share accounts insured by NCUA, through the National Credit 
Union Share Insurance Fund, are backed by the full faith and credit of 
the United States government. Section 740.4 of NCUA's regulations 
establishes the content and physical appearance of the official sign 
and dictates where insured credit unions must display the sign. In June 
2006, NCUA issued a proposed rule to amend Sec.  740.4 to comply with 
statutory requirements and Sec.  740.4 and Sec.  740.5 to reflect 
recent share insurance increases. 71 FR 36719 (June 28, 2006).
    The Conforming Amendments Act also imposes a penalty on an insured 
credit union that violates any statutory or regulatory provision 
related to the official sign. Specifically, an insured credit union is 
subject to a penalty of up to $100 a day for every day it is in 
violation of statutory or regulatory requirements. The proposal 
reflected this statutory provision in Sec.  740.4.

B. Initial Supply of New Signs and Compliance Dates

    In the proposed rule, NCUA stated it would provide all insured 
credit unions with an initial supply of the revised official sign with 
a blue background and white lettering at no cost to credit unions and 
would make a downloadable graphic available on the agency Web site for 
credit unions to use on their Web sites. NCUA intends to ship the signs 
immediately following Board approval of this final rule, and credit 
unions should receive their signs around the time of the official 
publication of this rule.
    NCUA did not suggest a compliance date for replacing the official 
sign at teller windows, on Web sites, or on advertisements. Rather, 
NCUA asked for comments on whether 60 days after receiving the signs 
from NCUA would be a reasonable period for credit unions to come into 
compliance. As discussed in detail in the summary of comments section 
below, NCUA is setting two separate compliance dates for credit unions 
to incorporate the revised official sign. A credit union will have up 
to six months from the effective date of this rule to replace old signs 
with revised signs at each station or window where the credit union 
normally receives insured funds or deposits in its principal place of 
business and all of its branches and on its internet page where it 
accepts deposits or opens accounts. Credit unions will have up to one 
year from the effective date of the rule to exhaust or otherwise 
dispose of their existing supplies of other materials on which the 
official sign appears and replace them with materials containing the 
revised official sign.

C. Summary of Comments

    NCUA received a total of eighty-one comments regarding the proposed 
rule from eight credit union trade associations, thirty-five federal 
credit unions, thirty-six state credit unions and two individuals who 
did not identify the credit unions with which they are associated.
    The vast majority of commenters focused on the compliance date of 
the rule. Most commenters indicated the rule creates two separate tasks 
credit unions need to perform to comply and that each should have its 
own compliance date. For example, about half the commenters believed 60 
days is a reasonable time period to replace the old sign with the 
revised sign at each station or window where the credit union normally 
receives insured funds or deposits in its principal place of business 
and all of its branches and on its Internet page where it accepts 
deposits or opens accounts. A few of these commenters also noted 
additional time would be preferable. Seventeen commenters stated more 
than 60 days is necessary to comply and a number of them suggested six 
months and one suggested a year. NCUA does not wish to overburden any 
credit union in this regard. Accordingly, NCUA will allow up to six 
months for credit unions to comply with this aspect of the rule.
    Also, commenters explained that, in addition to placing the 
official sign where required by regulation, such as at teller windows 
and on Web pages, credit unions also voluntarily use the official sign 
on a vast array of materials they provide to members. Commenters noted 
these materials include marketing and promotional materials, 
disclosures, envelopes, statement paper, lobby flyers and posters, 
membership agreements, and other documents.
    Seventy-seven commenters agreed that credit unions need a longer 
compliance period to deal with revising these materials. The great 
majority of these commenters expressed two main themes about revising 
the materials. They noted it could take a long time to redesign and 
reprint them and the expense of doing so could be high and cause 
budgetary problems, especially for smaller credit unions. They 
explained credit unions usually purchase these kinds of materials in 
bulk to lower their costs. As a result, credit unions may have large 
inventories that could last for a year for which they have already 
paid. They suggested NCUA permit credit unions to exhaust their 
existing supplies of materials before being required to replace them 
with materials containing the revised official sign. Some suggested 
specific time frames, ranging from six months to a number of years and 
others left it more open-ended, suggesting whenever the existing 
inventory is exhausted. Many also noted that members would not be 
adversely affected by an extended compliance period. NCUA acknowledges 
the commenters' concerns. Accordingly, NCUA will permit credit unions 
one year from the effective date to comply with this aspect of the 
final rule.
    Nine commenters suggested adding additional language to the sign to 
specifically reference the $250,000 coverage for certain retirement 
accounts. Three commenters suggested adding the word ``are'' to the 
sign between the words ``savings'' and ``federally'' for readability. 
Nine commenters expressed concern and disapproval for the statutorily 
mandated penalty of up to $100 per day for not complying with official 
sign requirements. The familiar design and limited language of the sign 
is intended to instill confidence in members that their funds are 
insured by the NCUA and backed by the full faith and credit of the 
United States Government. NCUA believes that adding too much additional 
information to a small sign detracts from that simple and easily 
understood message, lessens the legibility of the sign in certain 
media, and could actually confuse members into thinking they have more 
insurance coverage than they do. NCUA believes the redesigned sign 
strikes a balance between providing accurate and sufficient information 
with the logistical need for the sign to be brief. Finally, the 
redesigned sign parallels the language on the Federal Deposit Insurance

[[Page 67438]]

Corporation's newly redesigned sign and reflects cooperation between 
Federal agencies. The $100 per day penalty for not complying with Part 
740 is statutory and beyond NCUA's ability to change. NCUA believes it 
has accommodated commenters' concerns about the penalty, however, by 
setting compliance dates far enough in the future to allow credit 
unions ample time to comply.

D. Technical Clarification

    NCUA is amending Sec.  740.4(b)(2) to ensure its policy that a 
credit union may use the color scheme of its choice regarding the 
official sign is clearly reflected. 68 FR 23381, 23382 (May 2, 2003). 
The current regulation contains language that could be read to prohibit 
a credit union from using signs in colors other than those provided to 
it by NCUA at each station or window where the credit union normally 
receives insured funds or deposits in its principal place of business 
and all of its branches and on its Internet page where it accepts 
deposits or opens accounts. That language is removed to make clear a 
credit union may use signs in different colors in those locations. 
Additionally, NCUA reiterates that a credit union also may alter the 
official sign's font sizes to ensure it is legible and visually 
prominent on a Web page. 68 FR 23381 (May 2, 2003). Credit unions may 
do the same on other documents where they have chosen to include the 
official sign in connection with the official advertising statement or 
for other purposes not required by Part 740. A credit union may not 
alter the font size of the official sign as provided by NCUA for 
placement at each station or window where the credit union normally 
receives insured funds or deposits in its principal place of business 
and all of its branches. Also, the depiction of the sign published in 
the proposal inadvertently omitted an interior border surrounding the 
language of the sign. The depiction below includes that border but does 
not make any substantive changes.

Regulatory Procedures

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 credit unions (those under ten million 
dollars in assets). This rule clarifies that share accounts insured by 
NCUA are backed by the full faith and credit of the United States 
Government. It establishes reasonable compliance dates and is 
structured to minimize any regulatory burden to ensure it will not have 
a significant economic impact on a substantial number of small credit 
unions. Therefore, a regulatory flexibility analysis is not required.

Paperwork Reduction Act

    NCUA has determined that this rule would 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 would not have substantial direct 
effects on the states, on the connection 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 would not affect family 
well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, 1999, Public Law 105-277, 112 
Stat. 2681 (1998).

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(Pub. L. 104-121) (SBREFA) provides generally for congressional review 
of agency rules. A reporting requirement is triggered in instances 
where NCUA issues a final rule as defined by Section 551 of the 
Administrative Procedure Act. 5 U.S.C. 551. The Office of Management 
and Budget has determined that this rule is not a major rule for 
purposes of SBREFA. As required by SBREFA, NCUA will file the 
appropriate reports with Congress and the General Accounting Office so 
this rule may be reviewed.

List of Subjects in 12 CFR Part 740

    Advertisements, Credit unions.

    By the National Credit Union Administration Board on November 
16, 2006.
Mary F. Rupp,
Secretary of the Board.

0
For the reasons discussed above, NCUA is amending 12 CFR part 740 as 
follows:

PART 740--ACCURACY OF ADVERTISING AND NOTICE OF INSURED STATUS

0
1. The authority citation for part 740 continues to read as follows:

    Authority: 12 U.S.C. 1766, 1781, 1789.


0
2. Section 740.4 is amended by revising the figure in paragraph (b) 
introductory text, by revising paragraph (b)(2) and by adding new 
paragraph (f) to read as follows:


Sec.  740.4  Requirements for the official sign.

* * * * *
    (b) * * *

[[Page 67439]]

[GRAPHIC] [TIFF OMITTED] TR22NO06.012

    (1) * * *
    (2) An insured credit union may purchase signs from commercial 
suppliers or develop its own in any color scheme so long as they are 
legible and otherwise comply with this part. A credit union may alter 
the font size of the official sign to make it legible on its Internet 
page and on documents it provides to its members including 
advertisements, but it may not do so on signs to be placed at each 
station or window where the credit union normally receives insured 
funds or deposits in its principal place of business and all of its 
branches.
* * * * *
    (f) An insured credit union that fails to comply with Section 
205(a) of the Federal Credit Union Act regarding the official sign, 12 
U.S.C. 1785(a), or any requirement in this part is subject to a penalty 
of up to $100 per day.

0
3. Section 740.5(c)(11) is amended by removing ``of $100,000'' and 
adding in its place ``insurance amount''.

[FR Doc. E6-19682 Filed 11-21-06; 8:45 am]
BILLING CODE 7535-01-P