[Federal Register Volume 80, Number 121 (Wednesday, June 24, 2015)]
[Proposed Rules]
[Pages 36252-36255]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15472]


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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of its regulations to identify outdated, unnecessary, or burdensome 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.'' The second notice followed, 
covering the three categories of ``Agency Programs,'' ``Capital,'' and 
``Consumer Protection,'' which was published on December 19, 2014. The 
Board continues the review process with the publication of this third 
notice, covering the next three categories of rules: ``Corporate Credit 
Unions,'' ``Directors, Officers and Employees,'' and ``Money 
Laundering.'' 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.

DATES: Comment must be received on or before September 22, 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: 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\ The second notice followed, covering the 
three categories of ``Agency Programs,'' ``Capital,'' and ``Consumer 
Protection,'' which was published on December 19, 2014.\2\
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    \1\ 79 FR 32121 (June 4, 2014)
    \2\ 79 FR 79763 (December 19, 2014)
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I. Introduction

    Congress enacted EGRPRA \3\ 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

[[Page 36253]]

Corporation; herein Agencies \4\) 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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    \3\ Pub. L. 104-208, Div. A, Title II, section 2222, 110 Stat. 
3009 (1996); codified at 12 U.S.C. 3311.
    \4\ 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. One such unique 
issue, corporate credit unions, is included in this third notice.
    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 third notice, 
the Board will issue one more notice for comment later on during 2015. 
The EGRPRA review supplements and complements the reviews of 
regulations that NCUA conducts under other laws and its internal 
policies.\5\
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    \5\ 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, the creation of 
the Consumer Financial Protection Bureau (CFPB) resulted in the 
transfer to it 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 excluded certain 
consumer protection regulations from the scope of the current 
review.\6\
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    \6\ 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 
received, 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.\7\ Further, the Board addresses the issue of regulatory 
burden every time it proposes and adopts a rule. Under the Paperwork 
Reduction Act of 1995,\8\ the Regulatory Flexibility Act,\9\ and 
internal agency policies, NCUA examines each rulemaking to minimize the 
burdens it might impose on the industry and considers various 
alternatives.
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    \7\ IRPS 87-2, 52 FR 35231 (Sept. 8, 1987) as amended by IRPS 
03-2, 68 FR 32127 (May 29, 2003).
    \8\ 44 U.S.C. 3501 et seq.
    \9\ 5 U.S.C. 601 et seq.
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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.\10\ 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

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difficult for institutions of smaller asset size, with fewer resources 
available.
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    \10\ In February 2015, the Board proposed raising the threshold 
again, this time to $100 million. 80 FR 11954 (Mar. 5, 2015). The 
Board has not yet taken final action with respect to the proposal.
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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.\11\ 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.\12\ 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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    \11\ 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.
    \12\ 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, 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 two categories in 
alphabetical order in a similar format.

IV. Request for Burden Reduction Recommendations About the Categories 
of Regulations: ``Corporate Credit Unions,'' ``Directors, Officers, and 
Employees,'' and ``Money Laundering''

    The Board seeks public comment on regulations within the following 
three categories--``Corporate Credit Unions,'' ``Directors, Officers, 
and Employees,'' and ``Money Laundering''-- 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)?

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Could we 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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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.
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   V.B.--Categories and Regulations About Which NCUA Will Seek Comment
                                  Later
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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            subpart B.
                                 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 record
                                 retention appendix.
                                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 June 18, 
2015.
Gerard Poliquin,
Secretary of the Board.
[FR Doc. 2015-15472 Filed 6-23-15; 8:45 am]
 BILLING CODE 7535-01-P