[Federal Register Volume 79, Number 244 (Friday, December 19, 2014)]
[Proposed Rules]
[Pages 75763-75766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29629]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Chapter VII


Regulatory Publication and Review Under the Economic Growth and 
Regulatory Paperwork Reduction Act of 1996

AGENCY: National Credit Union Administration.

ACTION: Notice of regulatory review; request for comments.

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SUMMARY: The NCUA Board (Board) is continuing its comprehensive review 
of its regulations to identify outdated, unnecessary, or burdensome 
regulatory requirements imposed on federally insured credit unions, as 
contemplated by section 2222 of the Economic Growth and Regulatory 
Paperwork Reduction Act of 1996 (EGRPRA). This second decennial review 
of regulations began when the Board issued its first EGRPRA notice on 
May 22, 2014, covering the two categories of ``Applications and 
Reporting'' and ``Powers and Activities.'' \1\ Today, the Board 
continues the review process with the publication of this second 
notice, covering the next three categories of rules: ``Agency 
Programs,'' ``Capital,'' and ``Consumer Protection.'' This review 
presents a significant opportunity to consider the possibilities for 
burden reduction in groups of similar regulations. The Board welcomes 
comment on the categories, the order of review, and all other aspects 
of this initiative in order to maximize the review's effectiveness.
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    \1\ 79 FR 32121 (June 4, 2014).

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DATES: Comment must be received on or before March 19, 2015.

ADDRESSES: You may submit comments by any of the following methods 
(Please send comments by one method only):
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     NCUA Web site: http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html. Follow the 
instructions for submitting comments.
     Email: Address to [email protected]. Include ``[Your 
name] Comments on Regulatory Review pursuant to EGRPRA'' in the email 
subject line.
     Fax: (703) 518-6319. Use the subject line described above 
for email.
     Mail: Address to Gerard Poliquin, Secretary of the Board, 
National Credit Union Administration, 1775 Duke Street, Alexandria, 
Virginia 22314-3428.
     Hand Delivery/Courier: Same as mail address.
    Public Inspection: All public comments are available on the 
agency's Web site at http://www.ncua.gov/Legal/Regs/Pages/PropRegs.aspx 
as submitted, except as may not be possible for technical reasons. 
Public comments will not be edited to remove any identifying or contact 
information. Paper copies of comments may be inspected in NCUA's law 
library at 1775 Duke Street, Alexandria, Virginia 22314, by appointment 
weekdays between 9:00 a.m. and 3:00 p.m. To make an appointment, call 
(703) 518-6546 or send an email to [email protected].

FOR FURTHER INFORMATION CONTACT: Ross P. Kendall, Special Counsel to 
the General Counsel, at the above address, or telephone: (703) 518-
6562.

SUPPLEMENTARY INFORMATION:

I. Introduction

    Congress enacted EGRPRA \2\ as part of an effort to minimize 
unnecessary government regulation of financial institutions consistent 
with safety and soundness, consumer protection, and other public policy 
goals. Under EGRPRA, the appropriate federal banking agencies (Office 
of the Comptroller of the Currency, Board of Governors of the Federal 
Reserve System, and Federal Deposit Insurance Corporation; herein 
Agencies \3\) and the Federal Financial Institutions Examination 
Council (FFIEC) must review their regulations to identify outdated, 
unnecessary, or unduly burdensome requirements imposed on insured 
depository institutions. The Agencies are required, jointly or 
individually, to categorize regulations by type, such as ``consumer 
regulations'' or ``safety and soundness'' regulations. Once the 
categories have been established, the Agencies must provide notice and 
ask for public comment on one or more of these regulatory categories.
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    \2\ Pub. L. 104-208, Div. A, Title II, section 2222, 110 Stat. 
3009 (1996); codified at 12 U.S.C. 3311.
    \3\ The Office of Thrift Supervision was still in existence at 
the time EGRPRA was enacted and was included in the listing of 
Agencies. Since that time, the OTS has been eliminated and its 
responsibilities have passed to the Agencies and the Consumer 
Financial Protection Bureau.
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    NCUA is not technically required to participate in the EGRPRA 
review process, since NCUA is not an ``appropriate Federal banking 
agency'' as specified in EGRPRA. In keeping with the spirit of the law, 
however, the Board has once again elected to participate in the review 
process. Thus, NCUA has participated along with the Agencies in the 
planning process, but has developed its own regulatory categories that 
are comparable with those developed by the Agencies. Because of the 
unique circumstances of federally insured credit unions and their 
members, the Board is issuing a separate notice from the Agencies. 
NCUA's notice is consistent and comparable with the Agencies' notice, 
except on issues that are unique to credit unions.
    In accordance with the objectives of EGRPRA, the Board asks the 
public to identify areas of its regulations that are outdated, 
unnecessary, or unduly burdensome. In addition to this second notice, 
the Board will issue two more notices for comment during 2015, at 
regular intervals. The EGRPRA review supplements and complements the 
reviews of regulations that NCUA conducts under other laws and its 
internal policies.\4\
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    \4\ Interpretive Ruling and Policy Statement (IRPS) 87-2, 52 FR 
35231 (Sept. 8, 1987) as amended by IRPS 03-2, 68 FR 32127 (May 29, 
2003.) (Reflecting NCUA's commitment to ``periodically update, 
clarify and simplify existing regulations and eliminate redundant 
and unnecessary provisions.'')
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    As the Board noted in its initial EGRPRA notice in May 2014, the 
creation of the Consumer Financial Protection Bureau (CFPB) resulted in 
the transfer to CFPB of responsibility for certain consumer protection 
rules that had previously been the responsibility of the Agencies and/
or NCUA, such as Regulation Z and rules governing consumer privacy. 
Because the CFPB is not covered by EGRPRA or required to participate in 
this regulatory review process, the Agencies and NCUA have excluded 
certain consumer protection regulations from the scope of the current 
review.\5\ In the case of rules implementing specific aspects of the 
Fair Credit Reporting Act, the Truth in Savings Act, rules pertaining 
to fair lending in the housing area, and flood insurance, NCUA has 
retained rule-writing authority. Therefore, these rules are retained 
for purposes of the EGRPRA

[[Page 75764]]

review and comprise one of the categories for which comment is 
currently being solicited. Rules pertaining to share insurance and 
advertising also remain within NCUA's province and, therefore, are 
included as well.
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    \5\ In addition to rules that have been transferred to the CFPB, 
insured credit unions are also subject to certain other regulations 
that are not required to be reviewed under the EGRPRA process, such 
as regulations issued by the Department of the Treasury's Financial 
Crimes Enforcement Network. Any comment received during the EGRPRA 
process that pertains to such a rule will be forwarded to the 
appropriate agency.
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    EGRPRA contemplates a two-part regulatory response. First, NCUA 
will publish in the Federal Register a summary of the comments it 
receives, identifying and discussing the significant issues raised. 
Second, the law directs the Agencies to ``eliminate unnecessary 
regulations to the extent that such action is appropriate.'' As was 
done during the initial decennial review process, the Board anticipates 
that it will prepare its response separately from the Agencies, but at 
around the same time.
    EGRPRA further requires the FFIEC to submit a report to the 
Congress within 30 days after NCUA and the Agencies publish the comment 
summary and analysis in the Federal Register. This report must 
summarize any significant issues raised by the public comments and the 
relative merits of those issues. The report also must analyze whether 
the appropriate federal financial regulator involved is able to address 
the regulatory burdens associated with the issues by regulation, or 
whether the burdens must be addressed by legislation. The FFIEC report 
submitted to Congress following the initial decennial EGRPRA review 
included an Agency section discussing banking sector issues and a 
separate section devoted to NCUA and credit union issues. It is likely 
that the FFIEC will follow a similar approach in this second decennial 
EGRPRA review and report process.

II. The EGRPRA Review's Special Focus

    The regulatory review contemplated by EGRPRA provides a significant 
opportunity for the public and the Board to consider groups of related 
regulations and identify possibilities for streamlining. The EGRPRA 
review's overall focus on the totality of regulations will offer a new 
perspective in identifying opportunities to reduce regulatory burden. 
For example, the EGRPRA review may facilitate the identification of 
regulatory requirements that are no longer consistent with the way 
business is conducted and that therefore might be eliminated. Of 
course, reducing regulatory burden must be consistent with ensuring the 
continued safety and soundness of federally insured credit unions and 
appropriate consumer protections.
    EGRPRA also recognizes that burden reduction must be consistent 
with NCUA's statutory mandates, many of which currently require certain 
regulations. One of the significant aspects of the EGRPRA review 
program is the recognition that effective burden reduction in certain 
areas may require legislative change. The Board will be soliciting 
comment on, and reviewing the comments and regulations carefully for, 
the relationship among burden reduction, regulatory requirements, and 
statutory mandates. This will be a key aspect of the report to 
Congress.
    The Board views the approach of considering the relationship of 
regulatory and statutory change on regulatory burden, in concert with 
EGRPRA's provisions calling for grouping regulations by type, to 
provide the potential for particularly effective burden reduction. The 
Board believes the EGRPRA review can also significantly contribute to 
its on-going efforts to reduce regulatory burden. Since 1987, a 
formally adopted NCUA policy has required the Board to review each of 
its regulations at least once every three years with a view toward 
eliminating, simplifying, or otherwise easing the burden of each 
regulation.\6\ Further, the Board addresses the issue of regulatory 
burden every time it proposes and adopts a rule. NCUA complies with the 
Paperwork Reduction Act of 1995 \7\ the Regulatory Flexibility Act \8\ 
and the Small Business Regulatory Enforcement Fairness Act of 1996 \9\ 
in connection with each rulemaking and evaluates the burdens the 
rulemaking might impose on the industry, consistent with safety and 
soundness and consumer protection considerations.
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    \6\ IRPS 87-2, 52 FR 35231 (Sept. 8, 1987) as amended by IRPS 
03-2, 68 FR 32127 (May 29, 2003).
    \7\ 44 U.S.C. 3501 et seq.
    \8\ 5 U.S.C. 601 et seq.
    \9\ Pub. L. 104-121, 110 Stat 857 (1996).
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    The Board is particularly sensitive to the impact of agency rules 
on small institutions. In 2013, the Board formally increased the 
threshold for meeting the ``small'' classification to having assets of 
$50 million or less. The Board is cognizant that each new or amended 
regulation has the potential for requiring significant expenditures of 
time, effort, and money to achieve compliance, and also that this 
burden can be particularly difficult for institutions of smaller asset 
size, with fewer resources available.

III. The Board's Proposed Plan

    EGRPRA contemplates the categorization of regulations by ``type.'' 
During the initial decennial review, the Board developed and published 
for comment ten categories for NCUA's rules, including some that had 
been issued jointly with the Agencies. The Board believes these initial 
categories worked well for the purpose of presenting a framework for 
the review and so has retained them for this second review.\10\ The 
categories, in alphabetical order, are: Agency Programs; Applications 
and Reporting; Capital; Consumer Protection; Corporate Credit Unions; 
Directors, Officers and Employees; Money Laundering; Powers and 
Activities; Rules of Procedure; and Safety and Soundness. As noted 
above, some of the rules in the consumer protection category are now 
under CFPB's jurisdiction and administration, and those affected rules 
have been eliminated. Any rules adopted for the first time since 2006 
have been included in the appropriate category.\11\ Rules still in 
proposed form are not included in this review; commenters may be sure 
that comments submitted directly in response to proposed rules will be 
given due consideration within that process.
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    \10\ Consistent with EGRPRA's focus on reducing burden on 
insured credit unions, the Board has not included internal, 
organizational or operational regulations in this review. These 
regulations impose minimal, if any, burden on insured credit unions.
    \11\ Commenters should note, in this respect, that for new 
regulations that have only recently gone into effect, some passage 
of time may be necessary before the burden associated with the 
regulatory requirements can be fully and properly understood.
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    As the Board noted during the initial decennial review, although 
there are other possible ways of categorizing its rules, these ten 
categories ``are logical groupings that are not so broad such that the 
number of regulations presented in any one category would overwhelm 
potential commenters. The categories also reflect recognized areas of 
industry interest and specialization or are particularly critical to 
the health of the credit union system.'' As was also noted during the 
initial review, some regulations, such as lending, pertain to more than 
one category and are included in all applicable categories.
    The Board remains convinced that publishing its rules for public 
comment separately from the Agencies is the most effective method for 
achieving EGRPRA's burden reduction goals for federally insured credit 
unions. Owing to differences in the credit union system as compared to 
the banking system, there is not a direct, category by category, 
correlation between NCUA's rules and those of the Agencies. For 
example, credit unions deal with issues such as membership, credit 
union service organizations, and corporate credit unions, all of which 
are unique to credit union operations. Similarly,

[[Page 75765]]

certain categories identified by the Agencies have limited or no 
applicability in the credit union sector, such as community 
reinvestment, international operations, and securities. The categories 
developed by the Board and the Agencies reflect these differences. The 
Board intends to maintain comparability with the Agencies' notices to 
the extent there is overlap or similarity in the issues and the 
categories.
    After the conclusion of the comment period for each EGRPRA notice 
published in the Federal Register, the Board will review the comments 
it has received and decide whether further action is appropriate with 
respect to the categories of regulations included in that notice.
    The Board has prepared two charts to assist public understanding of 
the organization of its review. The first chart, set forth at Section 
V.A. below, presents the three categories of regulations on which NCUA 
is requesting burden reduction recommendations in this notice. The 
three categories are shown in the left column. In the middle column are 
the subject matters that fall within the categories and in the far 
right column are the regulatory citations. The second chart, set forth 
at Section V.B. below, presents the remaining five categories in 
alphabetical order in a similar format.

IV. Request for Burden Reduction Recommendations for the Categories of 
Regulations: ``Agency Programs,'' ``Capital,'' and ``Consumer 
Protection''

    The Board seeks public comment on regulations within the following 
three categories--``Agency Programs,'' ``Capital,'' and ``Consumer 
Protection''--that may impose outdated, unnecessary, or unduly 
burdensome regulatory requirements on federally insured credit unions. 
Comments that cite particular provisions or language, and provide 
reasons why such provisions should be changed, would be most helpful to 
NCUA's review efforts. Suggested alternative provisions or language, 
where appropriate, would also be helpful. If the implementation of a 
comment would require modifying a statute that underlies the 
regulation, the comment should, if possible, identify the needed 
statutory change.
    Specific issues for commenters to consider. While all comments 
related to any aspect of the EGRPRA review are welcome, the Board 
specifically invites comment on the following issues:
     Need and purpose of the regulations. Do the regulations in 
these categories fulfill current needs? Has industry or other 
circumstances changed since a regulation was written such that the 
regulation is no longer necessary? Have there been shifts within the 
industry or consumer actions that suggest a re-focus of the underlying 
regulations?
    Do any of the regulations in these categories impose burdens not 
required by their authorizing statutes?
     Need for statutory change. Do the statutes impose 
unnecessary requirements? Are any of the statutory requirements 
underlying these categories redundant, conflicting or otherwise unduly 
burdensome? If so, how should the statutes be amended?
     Overarching approaches/flexibility of the regulatory 
standards. Generally, is there a different approach to regulating that 
the Board could use that would achieve statutory goals while imposing 
less burden? Do any of the regulations in these categories or the 
statutes underlying them impose unnecessarily inflexible requirements?
     Effect of the regulations on competition. Do any of the 
regulations in these categories or the statutes underlying them create 
competitive disadvantages for credit unions compared to another part of 
the financial services industry? If so, how should these regulations be 
amended?
     Reporting, recordkeeping and disclosure requirements. Do 
any of the regulations in these categories or the statutes underlying 
them impose particularly burdensome reporting, recordkeeping or 
disclosure requirements? Are any of these requirements similar enough 
in purpose and use so that they could be consolidated? What, if any, of 
these requirements could be fulfilled electronically to reduce their 
burden? Please provide specific recommendations.
     Consistency and redundancy. Do any of the regulations in 
these categories impose inconsistent or redundant regulatory 
requirements that are not warranted by the circumstances?
     Clarity. Are the regulations in these categories and the 
underlying statutes drafted in clear and easily understood language? 
Are there specific regulations or underlying statutes that need 
clarification?
     Scope of rules. Is the scope of each rule in these 
categories consistent with the intent of the underlying statute(s)? 
Could NCUA amend the scope of a rule to clarify its applicability or to 
reduce the burden, while remaining faithful to statutory intent? If so, 
specify which regulation(s) should be clarified.
     Burden on small insured institutions. The Board has a 
particular interest in minimizing burden on small insured credit unions 
(those with less than $50 million in assets). NCUA solicits comment on 
whether any regulations within these categories should be continued 
without change, amended or rescinded in order to minimize any 
significant economic impact the regulations may have on a substantial 
number of small federally insured credit unions.

   V. A. Regulations About Which Burden Reduction Recommendations Are
                           Requested Currently
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Agency Programs...............  Community Development   12 CFR 705.
                                 Revolving Loan
                                 Program.
                                Central Liquidity       12 CFR 725.
                                 Facility.
                                Designation of low-     12 CFR 701.34.
                                 income status;
                                 receipt of secondary
                                 capital accounts by
                                 low-income designated
                                 credit unions.
Capital.......................  Prompt corrective       12 CFR 702.
                                 action.
                                Adequacy of reserves..  12 CFR 741.3(a).
Consumer Protection...........  Nondiscrimination       12 CFR 701.31.
                                 requirement (Fair
                                 Housing).
                                Truth in Savings (TIS)  12 CFR 707.
                                Loans in areas having   12 CFR 760.
                                 special flood hazards.
                                Fair Credit             12 CFR 717,
                                 Reporting_identity      Subpart J.
                                 theft red flags.
                                Fair Credit             12 CFR 717.83.
                                 Reporting_disposal of
                                 consumer information.
                                Fair Credit             12 CFR 717.82.
                                 Reporting_duties
                                 regarding address
                                 discrepancies.
                                Share insurance.......  12 CFR 745.
                                Advertising...........  12 CFR 740.
                                Disclosure of share     12 CFR 741.10.
                                 insurance.
                                Notice of termination   12 CFR 741.5.
                                 of excess insurance
                                 coverage.
                                Uninsured membership    12 CFR 741.9.
                                 shares.
                                Member inspection of    12 CFR 701.3.
                                 credit union books,
                                 records, and minutes.
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   V. B. Categories and Regulations About Which NCUA Will Seek Comment
                                  Later
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Corporate Credit Unions.......  Corporate credit        12 CFR 704.
                                 unions.
Directors, Officers, and        Loans and lines of      12 CFR
 Employees.                      credit to officials.    701.21(d).
                                Reimbursement,          12 CFR 701.33.
                                 insurance, and
                                 indemnification of
                                 officials and
                                 employees.
                                Retirement benefits     12 CFR 701.19.
                                 for employees.
                                Management officials    12 CFR 711.
                                 interlock.
                                Fidelity bond and       12 CFR 713.
                                 insurance coverage.
                                General authorities     12 CFR 701.4.
                                 and duties of federal
                                 credit union
                                 directors.
                                Golden parachutes and   12 CFR 750.
                                 indemnification
                                 payments.
Money Laundering..............  Report of crimes or     12 CFR 748.1.
                                 suspected crimes.
                                Bank Secrecy Act......  12 CFR 748.2.
Rules of Procedure............  Liquidation             12 CFR 709 and
                                 (involuntary and        710.
                                 voluntary).
                                Uniform rules of        12 CFR 747,
                                 practice and            subpart A.
                                 procedure.
                                Local rules of          12 CFR 747,
                                 practice and            subparts B-M
                                 procedure.
Safety and Soundness..........  Lending...............  12 CFR 701.21.
                                Investments...........  12 CFR 703.
                                Supervisory committee   12 CFR 715.
                                 audit.
                                Security programs.....  12 CFR 748.0.
                                Guidelines for          12 CFR 748,
                                 safeguarding member     Appendices A
                                 information and         and B.
                                 responding to
                                 unauthorized access
                                 to member information.
                                Records preservation    12 CFR 749.
                                 program and
                                 appendices_record
                                 retention;
                                 catastrophic act
                                 preparedness.
                                Appraisals............  12 CFR 722.
                                Examination...........  12 CFR 741.1.
                                Liquidity and           12 CFR 741.12.
                                 contingency funding
                                 plans.
                                Regulations codified    12 CFR 741,
                                 elsewhere in NCUA's     subpart B.
                                 regulations as
                                 applying to federal
                                 credit unions that
                                 also apply to
                                 federally insured
                                 state-chartered
                                 credit unions.
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    By the National Credit Union Administration Board on December 
11, 2014.
Gerard Poliquin,
Secretary of the Board.
[FR Doc. 2014-29629 Filed 12-18-14; 8:45 am]
BILLING CODE 7535-01-P