[Federal Register Volume 79, Number 192 (Friday, October 3, 2014)]
[Rules and Regulations]
[Pages 59627-59630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-22715]



[[Page 59627]]

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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Parts 701, 706, and 790

RIN 3133-AE42


Unfair or Deceptive Acts or Practices; Technical Amendments

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: The Dodd-Frank Wall Street Reform and Consumer Protection Act 
(Dodd-Frank Act) repealed NCUA's rulemaking authority under the Federal 
Trade Commission Act (FTC Act). As a result, the NCUA Board (Board) is 
now repealing NCUA's regulations governing unfair or deceptive acts or 
practices. The Board is also making a number of technical amendments to 
other NCUA regulations to conform them to the agency's current central 
and field office structures. Additionally, the Board is amending NCUA's 
payday alternative loans regulation to replace all references to 
``short-term, small amount loans'' and ``STS loans'' with corresponding 
references to ``payday alternative loans'' and ``PAL loans.'' The 
latter terms more accurately reflect the nature and purpose of this 
loan product.

DATES: This final rule is effective on October 3, 2014.

FOR FURTHER INFORMATION CONTACT: Frank Kressman, Associate General 
Counsel, Office of General Counsel, at 1775 Duke Street, Alexandria, VA 
22314 or telephone: (703) 518-6540.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose of the Final Rule
II. Regulatory Amendments
III. Regulatory Procedures

I. Background and Purpose of the Final Rule

Why is the NCUA Board issuing this rule?

Part 706
    In 2010, President Obama signed into law the Dodd-Frank Act (Pub. 
L. 111-203, 124 Stat. 1376 (2010)). The Dodd-Frank Act substantially 
changed the federal legal framework with respect to consumer financial 
protection regulation. Among the many changes, section 1092 of the 
Dodd-Frank Act repealed NCUA's rulemaking authority under the FTC 
Act.\1\ As a result, the Board is repealing NCUA's rules under part 
706, titled ``Unfair or Deceptive Acts or Practices.''
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    \1\ 15 U.S.C. 57a(f) as amended by the Dodd-Frank Act.
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    Despite the repeal of part 706, NCUA still has supervisory and 
enforcement authority regarding unfair or deceptive acts or 
practices,\2\ which could include the practices previously addressed in 
part 706. NCUA may determine that statutory violations exist if federal 
credit unions engage in acts or practices that are prohibited by the 
Dodd-Frank Act or the FTC Act. Such prohibited acts or practices may 
include, but are not limited to:
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    \2\ NCUA has authority to enforce section 5 of the FTC Act (15 
U.S.C. 45), and sections 1031 and 1036 of the Dodd-Frank Act (12 
U.S.C. 5531 and 5536), under the Federal Credit Union Act. See 12 
U.S.C. 1786(e) and 1786(k)(2).
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     Including confessions of judgment, waivers of exemptions, 
wage assignments, or security interests on household goods in consumer 
contracts;
     Misrepresenting the nature or extent of cosigner 
liability; and
     Pyramiding late fees.
Agency Structure
    In November 2013, the Board approved a restructuring of NCUA's 
central office. This restructuring consisted of transferring certain 
functions from one office to another and establishing the Office of 
Continuity and Security Management (OCSM). OCSM performs all security-
related functions that were formerly the responsibility of several 
different offices. The core functions of OCSM are national continuity 
programs, emergency management and physical security, personnel 
security, and intelligence and information security. As a result of 
this and other organizational changes described in section II, the 
Board is making a number of conforming technical amendments to NCUA's 
regulations.
Payday Alternative Loans
    In September 2010, the Board amended its general lending regulation 
to enable federal credit unions (FCUs) to offer payday alternative 
loans (PAL loans).\3\ PAL loans serve as a viable alternative to 
predatory payday loans and can help members break free of their 
dependency on high-cost predatory payday loans. The Board encourages 
FCUs to make PAL loans available for their members who need them, 
provided they are offered in a safe and sound manner. To be more 
readily understood, NCUA is amending the current terminology used to 
describe this type of loan. Specifically, Sec.  701.21 currently refers 
to these loans as ``short-term, small amount loans'' or ``STS loans.'' 
The Board believes that replacing that terminology with ``payday 
alternative loans'' or ``PAL loans'' more accurately reflects the 
nature and purpose of this loan product. The updated terminology also 
is more consistent with the way NCUA and some industry stakeholders 
currently refer to this loan product. This important loan product 
deserves nomenclature that more precisely describes its function and is 
more readily understood.
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    \3\ 75 FR 58285 (Sept. 24, 2010).
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II. Regulatory Amendments

1. Part 706--Unfair or Deceptive Acts or Practices

    As discussed above, in response to changes made by the Dodd-Frank 
Act, this final rule repeals 12 CFR part 706.

2. Part 790--Changes to NCUA's Central and Field Office Structure

    As discussed above, the Board is amending part 790 of NCUA's 
regulations to conform it to NCUA's current central and field office 
structures.

Office of Continuity and Security Management

    The Office of Continuity and Security Management (OCSM), created in 
November 2013, began operating in January 2014. It was created to 
aggregate all of the agency's security-related functions into one 
office. The primary consolidated functions are continuity of operations 
planning, physical security, and personnel security. Also, NCUA put in 
place an additional security function to address national security 
issues affecting the financial services industry. All federal agencies 
are required to comply with various statutes and Executive Orders 
related to the safeguarding of national assets. Through OCSM, NCUA will 
be able to more efficiently respond to these federal mandates and 
conduct its security-related functions.
    The final rule amends Part 790 to add a new paragraph describing 
OCSM and its functions.

Office of the Chief Financial Officer

    The final rule amends the description of the Office of Chief 
Financial Officer to add strategic planning as one of its duties. NCUA 
shifted this duty from another office to better utilize staffing 
resources.

Office of Consumer Protection

    The final rule amends the description of the Office of Consumer 
Protection (OCP) to reflect that the office now has four divisions. The 
Board added two divisions within OCP to more efficiently

[[Page 59628]]

balance and structure the office's workload. In addition, NCUA deleted 
the duties of the Ombudsman from OCP's description. The Executive 
Director's office now supervises the Ombudsman.

Office of the Executive Director

    The Board established the Ombudsman position in April 1995, as 
required by the Riegle Community Development and Regulatory Improvement 
Act of 1994. The Ombudsman operates as an objective third party to 
resolve disputes that cannot be resolved at the operational level. In 
2013, the Board elevated the position of the Ombudsman to the Executive 
Director's office. It is supervised by the Executive Director's office 
and reports directly to the Board. Previously, OCP oversaw the 
Ombudsman's duties, and the Ombudsman reported to the Director of OCP.

Regional Offices

    NCUA realigned its regional offices effective January 1, 2014. This 
was designed to create geographically compact districts that balance 
workload, improve efficiency, and reduce travel costs. In addition, the 
new regional structure coincides with other changes to strengthen 
NCUA's supervision, such as the creation of the Office of National 
Examinations and Supervision. Each NCUA region now has approximately an 
equal number of examiners, in addition to supervision, special actions, 
and support personnel.
    The Board is updating the table in Sec.  790.2(c)(1)(i), indicating 
the states that each region is responsible for supervising. Nine states 
have been transferred among the NCUA regional offices for the reasons 
noted above.\4\ The changes are as follows:
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    \4\ http://www.ncua.gov/about/Leadership/Pages/field-program-offices.aspx. This map shows the current regional alignment.
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     Wisconsin is in Region I;
     Ohio is in Region II;
     Arkansas and Louisiana are in Region III;
     Colorado, Montana, New Mexico, and Wyoming are in Region 
IV and
     California is in Region V.
    Lastly, the territory of American Samoa is no longer listed in 
Sec.  790.2(c)(1)(i) as NCUA no longer supervises any credit unions in 
that jurisdiction.

3. Part 701--Payday Alternative Loans

    As discussed above, the Board is amending NCUA's payday alternative 
loans regulation to replace the terms ``short-term, small amount 
loans'' and ``STS loans'' with the terms ``payday alternative loans'' 
and ``PAL loans'' to more accurately reflect the nature and purpose of 
this loan product and to make it more readily understood.

III. 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 entities (primarily those under $50 million 
in assets).\5\ This final rule only makes non-substantive, technical 
changes. NCUA certifies that these technical amendments will not have a 
significant economic impact on a substantial number of small credit 
unions.
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    \5\ 5 U.S.C. 603(a).
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Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in 
which an agency by rule creates a new paperwork burden on regulated 
entities or modifies an existing burden.\6\ For purposes of the PRA, a 
paperwork burden may take the form of either a reporting or a 
recordkeeping requirement, both referred to as information collections. 
NCUA has determined that the technical amendments in this final rule do 
not increase the paperwork requirements under PRA or regulations of the 
Office of Management and Budget.
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    \6\ 44 U.S.C. 3507(d); 5 CFR part 1320.
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Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. 
NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), 
voluntarily complies with the executive order to adhere to fundamental 
federalism principles. This final rule will not have a substantial 
direct effect 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 final rule does not constitute a policy that has 
federalism implications for purposes of the executive order.

Assessment of Federal Regulations and Policies on Families

    NCUA has determined that this final rule will not affect family 
well-being within the meaning of Section 654 of the Treasury and 
General Government Appropriations Act, 1999.\7\
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    \7\ Public Law 105-277, 112 Stat. 2681 (1998).
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Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 \8\ 
(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 (APA).\9\ NCUA has submitted this rule to the Office of Management 
and Budget for it to determine if the final rule is a ``major rule'' 
for purposes of SBREFA. NCUA does not believe the rule is major.
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    \8\ Public Law 104-121, 110 Stat. 857 (1996).
    \9\ 5 U.S.C. 551.
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Final Rule

    Generally, the APA requires a federal agency to provide the public 
with notice and the opportunity to comment on agency rulemakings. The 
amendments in this rule are non-substantive and technical, or involve 
only matters relating to management and personnel and are exempt from 
APA notice and comment requirements.\10\ They reflect changes to NCUA's 
organizational structure, remove duplicative and imprecise language, 
make minor changes updating cross citations, and make minor changes 
which are statutorily required by the Dodd-Frank Act. The APA permits 
an agency to forego the notice and comment period under certain 
circumstances, such as when a rulemaking is technical and non-
substantive. NCUA finds that, in this instance, notice and public 
comment are unnecessary under section 553(b)(3)(B) of the APA.\11\ NCUA 
also finds good cause to dispense with the 30-day delayed effective 
date requirement under section 553(d)(3) of the APA.\12\ The rule, 
therefore, will be effective immediately upon publication.
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    \10\ 5 U.S.C. 553(a)(2) and 553(b)(3)(B).
    \11\ 5 U.S.C. 553(b)(3)(B).
    \12\ 5 U.S.C. 553(d)(3).
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List of Subjects

12 CFR Part 701

    Credit, Credit unions, Reporting and recordkeeping requirements.

12 CFR Part 706

    Consumer protection, Credit, Credit unions, Deception, 
Intergovernmental relations, Trade practices, Unfairness.

12 CFR Part 790

    Organization and functions (Government agencies).


[[Page 59629]]


    By the National Credit Union Administration Board on September 
18, 2014.
Gerard Poliquin,
Secretary of the Board.

    For the reasons discussed above, the NCUA Board amends 12 CFR parts 
701, 706, and 790 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, 1758, 1759, 
1761a, 1761b, 1766, 1767, 1782, 1784, 1786, 1787, 1789. Section 
701.31 is also authorized by 15 U.S.C. 1601, et seq., 42 U.S.C. 1981 
and 3601-3610. Section 701.35 is also authorized by 12 U.S.C. 4311-
4312.

0
2. Amend Sec.  701.21(c)(7)(iii) as follows:
0
a. Remove the words ``Short-term, small amount'' wherever they appear 
and add, in their place, the words ``Payday alternative''.
0
b. Remove the words ``short-term, small amount'' wherever they appear 
and add, in their place, the words ``payday alternative''.
0
c. Remove the words ``an STS'' wherever they appear and add, in their 
place, the words ``a PAL''.
0
d. Remove the term ``STS'' wherever it appears and add, in its place, 
the term ``PAL''.

PART 706--[REMOVED]

0
3. Under the authority of 12 U.S.C. 1751 et seq., part 706 is removed 
and reserved.

PART 790--DESCRIPTION OF NCUA; REQUESTS FOR AGENCY ACTION

0
4. The authority citation for part 790 continues to read as follows:

    Authority:  12 U.S.C. 1766, 1789, 1795f.


0
5. Amend Sec.  790.2 by:
0
a. Revising paragraphs (b)(4), (b)(6), and (b)(15);
0
b. Adding paragraph (b)(17); and
0
c. Revising paragraph (c)(1)(i).
    The revisions and addition read as follows:


Sec.  790.2  Central and field office organization.

* * * * *
    (b) * * *
    (4) The Office of the Chief Financial Officer. NCUA's Chief 
Financial Officer plans, organizes, implements, directs, and provides 
overall direction and leadership for:
    (i) Agency-wide strategic planning, budget formulation, and 
performance reporting;
    (ii) The agency's financial management system and financial 
reporting functions;
    (iii) Procurement and facilities management to include various 
administrative responsibilities such as property management, mail 
services, graphics support, supply management, printing, and 
publications management; and
    (iv) Managing the operations of the Operating and Insurance Funds, 
including payroll, travel policies, revenue assessment, and dividend 
distributions.
* * * * *
    (6) Office of the Executive Director. The Executive Director 
reports to the entire NCUA Board. The Executive Director translates 
NCUA Board policy decisions into workable programs, delegates 
responsibility for these programs to appropriate staff members, and 
coordinates the activities of the senior executive staff, which 
includes: the General Counsel; the Regional Directors; and the Office 
Directors for Chief Financial Officer, Examination and Insurance, Human 
Resources, Chief Information Officer, and Public and Congressional 
Affairs. Because of the nature of the attorney/client relationship 
between the Board and General Counsel, the General Counsel may be 
directed by the Board not to disclose discussions and/or assignments 
with anyone, including the Executive Director. The Executive Director 
is otherwise to be privy to all matters within senior executive staff's 
responsibility. The Executive Director also serves as the agency's 
Director of Equal Employment Opportunity. The Office of the Executive 
Director also supervises the agency's ombudsman. The ombudsman 
investigates complaints and recommends solutions on regulatory issues 
that cannot be resolved at the regional level.
* * * * *
    (15) Office of Consumer Protection. (i) The Office of Consumer 
Protection contains four divisions:
    (A) The Division of Consumer Compliance Policy and Outreach;
    (B) The Division of Consumer Affairs;
    (C) The Division of Consumer Access; and
    (D) The Division of Consumer Access-South.
    (ii) The office provides consumer services, including consumer 
education and complaint resolution; establishes, consolidates, and 
coordinates consumer protections within the agency; acts as the central 
liaison on consumer protection with other federal agencies; and 
nationalizes field of membership processing and chartering activities.
* * * * *
    (17) The Office of Continuity and Security Management. The Director 
of the Office of Continuity and Security Management is responsible for 
NCUA's emergency preparedness and for coordinating the response to 
natural disasters or national security events; for timely dissemination 
of information on cyber threats, terrorism, foreign criminal activity, 
and other national security threats to the agency or to the credit 
union sector; and for conducting risk assessments and managing 
executive branch programs to protect NCUA personnel and facilities, and 
to safeguard classified national security information.
    (c) * * *
    (1) Regional Offices. (i) The NCUA has five Regional Offices:

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   Region No.         Area within region            Office address
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I...............  Connecticut, Maine,         9 Washington Square,
                   Massachusetts, Michigan,    Washington Avenue
                   New Hampshire, New York,    Extension, Albany, NY
                   Rhode Island, Vermont,      12205-5512.
                   Wisconsin.
II..............  Delaware, District of       1900 Duke St., Suite 300,
                   Columbia, Maryland, New     Alexandria, VA 22314-
                   Jersey, Ohio,               3498.
                   Pennsylvania, Virginia,
                   West Virginia.
III.............  Alabama, Arkansas,          7000 Central Parkway,
                   Florida, Georgia,           Suite 1600, Atlanta, GA
                   Indiana, Kentucky,          30328-4598.
                   Louisiana, Mississippi,
                   North Carolina, Puerto
                   Rico, South Carolina,
                   Tennessee, Virgin Islands.
IV..............  Colorado, Illinois, Iowa,   4807 Spicewood Springs
                   Kansas, Minnesota,          Road, Suite 5200, Austin,
                   Missouri, Montana,          TX 78759-8490.
                   Nebraska, New Mexico,
                   North Dakota, Oklahoma,
                   South Dakota, Texas,
                   Wyoming.

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V...............  Alaska, Arizona,            1230 W. Washington Street,
                   California, Guam, Hawaii,   Suite 301, Tempe, AZ
                   Idaho, Nevada, Oregon,      85281.
                   Utah, Washington.
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[FR Doc. 2014-22715 Filed 10-2-14; 8:45 am]
BILLING CODE 7535-01-P