[Federal Register Volume 76, Number 13 (Thursday, January 20, 2011)]
[Rules and Regulations]
[Pages 3487-3488]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-1091]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 707

RIN 3133-AD72


Truth in Savings

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: On July 22, 2009, NCUA published a final rule amending NCUA's 
Truth in Savings regulation and the accompanying official staff 
interpretations. The final rule addressed credit unions' disclosure 
practices related to overdraft services, including balances disclosed 
to members through automated systems. This final rule amends NCUA's 
Truth in Savings rule and official staff interpretations to address the 
application of the July 2009 final rule to retail sweep programs and 
the terminology for overdraft fee disclosures and to make amendments 
that conform to the Federal Reserve Board's (Federal Reserve) final 
Regulation E amendments addressing overdraft services, adopted in 
November 2009. This rule also makes final the minor technical 
corrections to sample form B-12 that were part of the interim final 
rule.

DATES: The effective date of September 7, 2010 and October 1, 2010 for 
Sec.  707.11(a)(1)(i) is confirmed as final without change.

FOR FURTHER INFORMATION CONTACT: Justin M. Anderson, Staff Attorney, 
Office of General Counsel, National Credit Union Administration, 1775 
Duke Street, Alexandria, Virginia 22314-3428, or telephone: (703) 518-
6540.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Truth in Savings Act (TISA) requires NCUA to promulgate 
regulations substantially similar to those promulgated by the Federal 
Reserve within 90 days of the effective date of the Federal Reserve's 
rules. 12 U.S.C. 4311(b). In doing so, NCUA is to take into account the 
unique nature of credit unions and the limitations under which they pay 
dividends on member accounts. Id.
    On January 29, 2009, the Federal Reserve published a final rule 
amending Regulation DD, its TISA rule, and the official staff 
commentary to address depository institutions' disclosure practices 
related to overdraft services, including balances disclosed to 
consumers through automated systems. 74 FR 5584 (January 29, 2009). 
NCUA issued a similar final rule on July 22, 2009. 74 FR 36102 (July 
22, 2009). Both rules had an effective date of January 1, 2010.
    In November 2009, the Federal Reserve adopted a final rule amending 
Regulation E, which implements the Electronic Fund Transfer Act. This 
final rule limits a financial institution's ability to assess fees for 
paying ATM and one-time debit card transactions pursuant to the 
institution's discretionary overdraft service without the consumer's 
affirmative consent to such payment.
    Since publication of the Federal Reserve's January 2009 final rule, 
institutions and others have requested clarification of particular 
aspects of the rule and further guidance regarding compliance with the 
rule. In addition, the Federal Reserve believed conforming amendments 
to Regulation DD were necessary in light of certain provisions 
subsequently adopted in the Regulation E final rule. Accordingly, in

[[Page 3488]]

March 2010, the Federal Reserve proposed to amend Regulation DD and the 
official staff commentary. 75 FR 9126 (March 1, 2010). Based on 
comments it received, the Federal Reserve issued a final rule on June 
4, 2010. 75 FR 31673 (June 4, 2010).

II. Interim Final Rule

    In compliance with TISA, NCUA issued an interim final rule with 
request for comment on July 29, 2010, that was substantially similar to 
the Federal Reserve's June 2010 final rule. The interim final rule also 
included technical corrections to the aggregate overdraft and returned 
item fees sample form for formatting purposes. The Board issued the 
rule as an interim final rule because there is a strong public interest 
in having consumer-oriented rules in place that are consistent with 
those recently promulgated by the Federal Reserve. Additionally, as 
discussed above, NCUA is statutorily required to issue rules 
substantially similar to those of the Federal Reserve within 90 days of 
the effective date of the Federal Reserve's rules.

III. Summary of Comments

    NCUA received three comments on the interim final rule. Two 
comments were from credit union trade associations and one comment was 
from a State credit union league. Each commenter suggested some degree 
of change to the final rule. As discussed below, the three areas where 
comments offered suggestions were use of the term ``Total Overdraft 
Fees,'' use of model form B-12, and the mandatory compliance date for 
the amendments to Sec.  707.11(a)(1)(i).
    First, all three commenters requested the Board permit credit 
unions to use terms other than ``Total Overdraft Fees'' in a member's 
periodic statement. One commenter argued that the use of ``Total 
Overdraft Fees'' would actually result in more confusion as a credit 
union's account opening and promotional materials might use a different 
term than the one required by the rule on periodic statements. Another 
commenter suggested that the Board should allow credit unions to use 
the term ``Total Overdraft Fees for paid items,'' which, the commenter 
argues, will further enhance the distinction between fees paid for 
items that are covered by the credit union and fees paid because an 
item is returned for insufficient funds. The third commenter requested 
that the Board allow credit unions to use a term that is substantially 
similar to ``Total Overdraft Fees,'' which the commenter argues is in 
line with the Federal Reserve's regulations. The Board disagrees with 
these comments and reiterates its position from the interim final rule 
that permitting the use of terminology other than ``Total Overdraft 
Fees'' could be confusing to members and potentially undermines their 
ability to compare costs, particularly if the member has accounts at 
different credit unions that each use different terminology. Further, 
the Board notes that requiring credit unions to use the term ``Total 
Overdraft Fees'' is identical to the requirement in the Federal 
Reserve's rule and this term in conjunction with the other provisions 
in the current rule provide sufficient distinction between overdraft 
fees and fees for insufficient funds.
    Two commenters provided suggestions on the technical changes to 
model form B-12. One commenter asked for additional guidance on the 
requirement that credit unions disclose the information in model form 
B-12 in a tabular format. Another commenter requested that credit 
unions be required to continue using the original form to prevent them 
from needing to spend money on reformatting periodic disclosure forms. 
With regard to both comments, the Board notes that Sec.  707.11(a)(3) 
of NCUA's regulations requires credit unions to use a format that is 
substantially similar to model form B-12. With respect to the first 
comment, the Board does not believe that a non-tabular disclosure is 
``substantially similar'' to model form B-12 and, therefore, would be 
impermissible under the rule. With respect to the second comment, 
however, the Board does believe using model form B-12 without the 
interim final rule's technical corrections would be considered 
substantially similar. The technical corrections made in the interim 
final rule do not change the substance or purpose of the form, but 
rather ensure conformity with the model form used by the Federal 
Reserve. Credit unions can continue to use the non-amended form until 
their supplies are depleted.
    Finally, one commenter requested the Board extend the mandatory 
compliance date for the use of the term ``Total Overdraft Fees'' to 
provide credit unions with sufficient time to implement this change. 
Since the mandatory compliance date has already passed and credit 
unions are currently required to use the term ``Total Overdraft Fees,'' 
this comment is moot. Further, as noted in the preamble to the interim 
final rule, the Board did consider the burden on credit unions and 
chose a date that would allow compliance in conjunction with the 
Federal Reserve while minimizing the inconvenience to credit unions.

IV. Regulatory Procedures

    Section III of the SUPPLEMENTARY INFORMATION to the July 2009 final 
rule sets forth the Board's analyses under the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.), the Paperwork Reduction Act of 1995 (44 
U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Small Business 
Regulatory Enforcement Fairness Act (Pub. L. 104-121), Executive Order 
13132, and the Treasury and General Government Appropriations Act (Pub. 
L. 105-277, 112 Stat. 2681 1998). See 74 FR 36102-36106. Because the 
final amendments are clarifications and do not alter the substance of 
the analyses and determinations accompanying that final rule, the Board 
continues to rely on those analyses and determinations for purposes of 
this rulemaking.

    By the National Credit Union Administration Board on January 13, 
2010.
Mary F. Rupp,
Secretary of the Board.

List of Subjects in 12 CFR Part 707

    Advertising, Credit unions, Consumer protection, Reporting and 
recordkeeping requirements, Truth in savings.

    Accordingly, the interim final rule amending 12 CFR Part 707, which 
was published at 75 FR 47173 on August 5, 2010, is adopted as a final 
rule without change.

[FR Doc. 2011-1091 Filed 1-19-11; 8:45 am]
BILLING CODE 7535-01-P