[Federal Register Volume 72, Number 35 (Thursday, February 22, 2007)]
[Rules and Regulations]
[Pages 7927-7928]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-2902]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 701

RIN 3133-AD30


General Lending Maturity Limit and Other Financial Services

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: NCUA is amending its rules to implement amendments to the 
Federal Credit Union Act (FCU Act) made by the Financial Services 
Regulatory Relief Act of 2006 (Reg Relief Act). The final rule revises 
the maturity limit in the general lending rule and permits federal 
credit unions to provide certain, limited financial services to 
nonmembers within their fields of membership.

DATES: This final rule is effective March 26, 2007.

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

SUPPLEMENTARY INFORMATION:

A. Background

    In October 2006, Congress enacted the Reg Relief Act, which amended 
the general lending maturity limit for federal credit unions (FCUs) 
from 12 years to 15 years in Sec.  107(5) of the FCU Act as well as 
Sec.  107(12) of the FCU Act to permit FCUs to provide certain 
financial services to persons within their fields of membership. Pub. 
L. 109-351, Sec. Sec.  502-503, 120 Stat. 1966 (2006). On October 19, 
2006, the NCUA Board issued an interim final rule to implement these 
provisions of the Reg Relief Act. 71 FR 62875 (October 27, 2006). Even 
though the provisions of the interim final rule became effective on 
October 27, 2006, the Board issued the interim final rule with a 60-day 
comment period.

B. The Final Rule

    NCUA received eight comments on the interim final rule from federal 
credit unions and trade associations. All the commenters supported the 
interim final rule, and some provided additional comments. Two 
commenters encouraged NCUA to seek a longer maturity limit for loans on 
investment property. While the NCUA Board generally supports greater 
flexibility for permissible terms for investment loans, the suggestion 
is beyond the scope of NCUA's statutory authority and the interim 
rulemaking.
    Four commenters requested clarification on whether FCUs may charge 
a fee for selling negotiable checks, travelers checks, money orders, 
and other similar money transfer instruments under Sec.  701.30(a). Two 
commenters pointed out that Sec.  701.30(b) specifically permits FCUs 
to charge a fee for cashing negotiable or money transfer instruments.
    FCUs may charge a fee for ``selling'' money transfer instruments, 
and specifically providing that FCUs may charge a fee for ``cashing'' 
money transfer instruments does not limit that authority. The Reg 
Relief Act does not restrict the terms under which an FCU can sell 
negotiable instruments to a person within its field of membership, and 
the legislative history does not indicate that Congress intended the 
provision to have any special meaning. Therefore, the common 
understanding and meaning of the term ``sell'' in Sec.  503 of the Reg 
Relief Act and Sec.  701.30(a) of the rule apply. Selling, by 
definition, involves the transfer of goods or rendering services for a 
price. See, Random House Unabridged Dictionary 1739 (2d ed. 1993). 
Contrary to selling a money transfer instrument, ``cashing'' an 
instrument involves the exchange of the instrument for money in the 
amount reflected on the face of the instrument, and the term does not 
necessarily mean a fee for the service is permitted. FCUs have always 
had authority to cash a check drawn on a member's account regardless of 
the payee's membership status as this is a service to the member-
drawer; the Reg Relief Act permits FCUs to cash a check payable to a 
nonmember within their field of membership even if the drawer is not a 
member. The specific provision in the Reg Relief Act and the rule to 
charge a fee for this exchange permits FCUs to collect a payment for 
providing the check cashing service. Additionally, FCUs are not 
required to charge persons for financial services under section 503 of 
the Reg Relief Act or the rule, but ``may'' sell or charge a fee for 
them.
    Three commenters suggested NCUA define the term ``electronic funds 
transfer.'' The commenters stated the interim final rule was unclear on 
whether the term ``electronic funds transfer'' had the same definition 
as in Regulation E, 12 CFR part 205, or the term ``transmittal of 
funds'' under the anti-money laundering regulations, 31 CFR part 103. 
The Board believes it is unnecessary to define ``electronic funds 
transfer'' in this rule for two reasons. First, the term ``electronic 
funds transfer'' is defined in the Electronic Funds Transfer Act and 
Regulation E. 15 U.S.C. 1693a(6); 12 CFR 205.3. Second,

[[Page 7928]]

the types of money transfer instruments permissible under Sec.  701.30 
are not limited to electronic funds transfers. The rule permits an FCU 
to cash or sell checks, money orders, and other similar money transfer 
instruments. While the rule does not contain an exhaustive list of 
permissible money transfer instruments, it specifically includes 
electronic funds transfers. To the extent FCUs provide money transfer 
instruments that fall within the definition of electronic funds 
transfer under Regulation E, they must, of course, comply with 
Regulation E requirements.
    The Board notes that electronic funds transfers under Regulation E 
are excluded from the definition of ``transmittal of funds'' in the 
Department of Treasury's anti-money laundering regulations. 31 CFR part 
103. This definition, however, does not affect FCU authority to provide 
wire transfers under Sec.  701.30. FCUs providing wire transfer 
services and electronic funds transfers under Sec.  701.30 must comply 
with the applicable requirements of 31 CFR part 103.
    Two commenters requested NCUA provide guidance regarding FCU 
compliance with other statutes and regulations, e.g. the Bank Secrecy 
Act (Pub. L. 91-508), the Customer Identification Program regulation 
(31 CFR 103.121), NCUA security rules (12 CFR part 748), financial 
privacy rules (12 CFR part 716), and so forth. One of these commenters 
recommended NCUA establish a working group to discuss compliance 
requirements associated with FCUs providing financial services to 
nonmembers within their fields of membership. The Board believes 
additional guidance or a working group is unnecessary because this rule 
does not create any additional requirements for FCUs than there are for 
other financial institutions. The Board only cautions FCUs to ensure 
they comply with all applicable statutory or regulatory requirements if 
they elect to provide financial services to persons with whom the FCUs 
may have infrequent or irregular contact.
    Finally, one commenter correctly noted the interim final rule 
failed to make a conforming change to the 12-year maturity limit in the 
current rule regarding due-on-sale clauses. 12 CFR 701.21(g)(6)(ii). 
Accordingly, the final rule revises this reference to reflect the 
change in the general lending maturity limit to 15 years.

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, defined as those under ten 
million dollars in assets. This rule clarifies and improves the 
available services FCUs may provide to their members and persons within 
their fields of membership, without imposing any regulatory burden. The 
final amendments do 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 final rule would not increase 
paperwork requirements under the Paperwork Reduction Act of 1995 and 
regulations of the Office of Management and Budget. 44 U.S.C. 3501 et 
seq.; 5 CFR part 1320.

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. The final 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 final rule would not affect 
family well-being within the meaning of Sec.  654 of the Treasury and 
General Government Appropriations Act, 1999, Pub. L. 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 final rule is not a major rule for 
purposes of SBREFA.

List of Subjects in 12 CFR Part 701

    Check, Check cashing, Credit, Credit unions, Electronic funds 
transfer, Money order, Money transfer.

0
For the reasons set forth in the preamble, the Board amends 12 CFR part 
701 as set forth below.


    By the National Credit Union Administration Board on February 
15, 2007.
Mary F. Rupp,
Secretary of the Board.

0
Accordingly, the interim rule amending 12 CFR part 701, which was 
published at 71 FR 62875 on October 27, 2006, is adopted as a final 
rule with the following change:

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), 1757, 1765, 1766, 1781, 1782, 
1787, 1789; Title V, Pub. L. 109-351; 120 Stat. 1966.


0
2. Amend Section 701.21 by removing ``greater than twelve years'' in 
the first sentence and adding in its place ``greater than fifteen 
years'' in paragraph (g)(6)(ii).

 [FR Doc. E7-2902 Filed 2-21-07; 8:45 am]
BILLING CODE 7535-01-P