[Federal Register Volume 81, Number 119 (Tuesday, June 21, 2016)]
[Proposed Rules]
[Pages 40197-40201]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14718]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 705
RIN 3133-AE58
Community Development Revolving Loan Fund
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
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SUMMARY: The NCUA Board (Board) proposes to make several technical
amendments to NCUA's rule governing the Community Development Revolving
Loan Fund (CDRLF). The proposed amendments would make the rule more
succinct and update it to improve its transparency, organization, and
ease of use by credit unions.
DATES: Comments must be received on or before August 22, 2016.
[[Page 40198]]
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: https://www.ncua.gov/regulation-supervision/Pages/rules/proposed.aspx. Follow the instructions for
submitting comments.
Email: Address to [email protected]. Include ``[Your
name] Comments on Proposed Rule 705, CDRLF Amendments'' 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.
FOR FURTHER INFORMATION CONTACT: Geetha Valiyil, Manager, Grants and
Loans, Office of Small Credit Union Initiatives, or Justin Anderson,
Senior Staff Attorney, Office of General Counsel, at 1775 Duke Street,
Alexandria, VA 22314 or telephone (703) 518-6645 (Ms. Valiyil) or (703)
518-6540 (Mr. Anderson).
SUPPLEMENTARY INFORMATION:
A. Background
Congress created the CDRLF in 1979 with an initial appropriation of
$6 million and transferred its exclusive administration to NCUA in
1986. The CDRLF is a source of financial support, in the form of loans
and technical assistance grants, for credit unions serving
predominantly low-income members. It also serves as a source of funding
to help low-income credit unions respond to emergencies arising in
their communities. The Board has delegated authority to the Office of
Small Credit Union Initiatives to determine how to allocate the finite
resources of the CDRLF among qualifying credit unions. Awards provided
through the CDRLF have strengthened credit unions by enabling them to
increase their capacity to support the communities in which they
operate. This increased capacity has allowed credit unions to provide
basic financial services to low-income residents in those communities,
resulting in more opportunities for residents to improve their
financial circumstances.
In 2011, the Board substantially revised Part 705 to make the rule
clearer and more user friendly, as well as to eliminate outdated and
unnecessary provisions.\1\ The proposed amendments in this rule are
largely technical in nature or help to clarify NCUA's practices with
respect to disbursing money from the CDRLF.
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\1\ 76 FR 67583 (Nov. 2, 2011).
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B. Section by Section Analysis
Sec. 705.1. Authority, Purpose and Scope. The Board proposes to
reorganize this section to make it clearer, including deleting
unnecessary provisions. These proposed amendments do not include any
substantive changes.
Sec. 705.2. Definitions. The Board proposes to remove the
definitions of the terms ``Board,'' ``Credit Union,'' and ``Fund'' from
this section as these terms are defined elsewhere in part 705 or in
part 700 of NCUA's regulations.\2\ The Board also proposes to remove
the cross-reference to Sec. 705.6 in the definition of the term
``Notice of Funding Opportunity'' as unnecessary.
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\2\ 12 CFR part 700.
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Sec. 705.5. Terms and Conditions. The Board proposes to add the
words ``for loans'' to the title of this section to clarify that it
only applies to CDRLF loans, and not technical assistance grants. As
discussed in more detail below, the Board also proposes to add a
separate ``terms and conditions'' section for technical assistance
grants. This will improve the usability of the rule.
Section 705.5(b) includes a maximum aggregate loan amount of
$300,000 for CDRLF loans. The Board proposes to remove the dollar
amount from this section, as it is unnecessary and inaccurate. NCUA may
grant loans in any amount it sees fit. The dollar amount of individual
CDRLF loans may continue to rise in connection with need and economic
conditions. Rather than maintaining an outdated reference to a specific
dollar amount in the rule, the Board proposes to amend the rule by
providing that any CDRLF loan limits will be published in NCUA's Notice
of Funding Opportunity.\3\ This approach is more practical than having
to update the rule each time the loan funding limit changes. The Board
proposes to make a similar amendment with respect to technical
assistance grants.
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\3\ Notice of Funding Opportunity, as more fully defined in
Sec. 705.6 of NCUA's regulations, means the notice NCUA publishes
describing one or more loan or technical assistance grant programs
or initiatives being supported by the CDRLF and inviting interested
qualifying credit unions to submit applications to participate in
the program or initiative.
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The Board proposes to amend Sec. 705.5(h) by adding ``security
agreements'' to the list of terms and conditions that the section
provides will be addressed in the related Notice of Funding Opportunity
or applicable loan documents. The Board notes that this is not a
substantive change, but rather reflects NCUA's current practice of
including other terms and conditions related to loans in a Notice of
Funding Opportunity or loan documents, including security agreements.
Current Sec. 705.10. Technical assistance grants. Current Sec.
705.10 contains some provisions detailing the terms and conditions that
apply to technical assistance grants. The Board, proposes to simplify
and condense this provision and to include most of that information in
the Notice of Funding Opportunity. The amended regulatory language will
then be redesignated as proposed Sec. 705.6. This proposed amendment
is not a substantive change. Rather, it is a reorganization that
reflects NCUA's preference to provide such pertinent information in a
Notice of Funding Opportunity. The Board notes that these amendments
preserve NCUA's flexibility to issue grants based on the needs of
credit unions.
Current Sec. 705.6. Application and award processes. In conformity
with the above amendment regarding terms and conditions for technical
assistance grants, the Board proposes to redesignate current Sec.
705.6 as proposed Sec. 705.7. Further, the Board proposes to amend the
application and award processes provisions of current Sec. 705.6 to
more accurately reflect NCUA's actual practices as follows.
The Board proposes to remove any reference to NCUA publishing a
Notice of Funding Opportunity on other government Web sites. NCUA is
not legally required to do so and it currently does not do so. NCUA
currently publishes a Notice of Funding Opportunity on its Web site and
in the Federal Register. The Board also proposes to provide that NCUA
uses press releases as one method of supplementing information in a
Notice of Funding Opportunity. This amendment only clarifies current
NCUA practice.
The current rule states that NCUA will only provide a CDRLF loan or
technical assistance grant with the concurrence of the applicable
regional director.\4\ NCUA's practice, however, is to only require
regional director concurrence for loans, not technical assistance
grants. Accordingly, the Board proposes to remove from the rule the
current requirement for regional
[[Page 40199]]
director concurrence for technical assistance grants.
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\4\ 12 CFR 705.6(c)(4).
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With respect to CDRLF loan approval for federally insured, state-
chartered credit unions (FISCUs), the Board proposes to make the
concurrence process more efficient. Specifically, rather than requiring
a FISCU to obtain concurrence from its state supervisory authority
(SSA) before NCUA considers the FISCU's loan application, the Board
proposes to clarify that, while SSA concurrence is still required, a
FISCU is not required to obtain such concurrence before applying for a
loan. Under this proposed rule, NCUA would obtain concurrence directly
from the SSA rather than through the FISCU. However, the Board
encourages a FISCU applying for a loan to notify its SSA of its
application. This amendment will make the overall application process
less burdensome for FISCUs.
The Board proposes to reorganize and consolidate the disbursement
provisions for loans (current Sec. 705.6(g)) and technical assistance
grants (current Sec. 705.10) to better organize the rule. The Board
also proposes to reorganize the appeals provisions and consolidate them
into proposed Sec. 705.10 (appeals).
Sec. 705.9. Reporting and Monitoring. This section requires all
participating credit unions to report to their members their progress
in providing community support. Credit unions are also required to
submit a copy of any such report to NCUA. The Board notes, however,
that NCUA's current practice is only to monitor reports relating to
CDRLF loans, not technical assistance grants. While the Board believes
all credit unions should be as transparent as possible to members, the
Board also wants to eliminate unnecessary burdens on participating
credit unions. Therefore, the Board proposes to clarify that NCUA
encourages rather than mandates credit union reporting to members with
respect to technical assistance grants. This does not change the
reporting requirement related to CDRLF loans. The Board notes that a
credit union may satisfy the requirements of this section by using any
method that results in all members receiving a copy of the written
report, including emailing a copy of the report to members that have
access to email.
Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) requires NCUA to prepare an
analysis to describe any significant economic impact any proposed
regulation may have on a substantial number of small entities. NCUA
considers credit unions having less than ten million dollars in assets
to be small for purposes of RFA. The proposed revisions to part 705 are
designed to update and streamline the rule, thereby reducing the burden
for credit unions that are seeking financial awards, whether in the
form of a technical assistance grant or a loan. NCUA has determined and
certifies that this proposed rule, if adopted, will not have a
significant economic impact on a substantial number of small credit
unions. Accordingly, the NCUA has determined that an RFA analysis is
not required.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in
which an agency by rule creates a new paperwork burden or increases an
existing burden. For purposes of the PRA, a paperwork burden may take
the form of a reporting or recordkeeping requirement, both referred to
as information collections. The proposed changes in this rulemaking are
technical in nature and will not create new paperwork burdens or modify
any existing paperwork burdens.
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. This rulemaking will not have a substantial
direct effect 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 proposal 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 proposed rule will not affect
family well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999, Public Law 105-277, 112
Stat. 2681 (1998).
List of Subjects in 12 CFR Part 705
Community programs, Credit unions, Grants, Loans, Low income,
Revolving fund.
By the National Credit Union Administration Board on June 16,
2016.
Gerard Poliquin,
Secretary of the Board.
For the reasons stated above, NCUA proposes to amend 12 CFR part
705 as follows:
PART 705--COMMUNITY DEVELOPMENT REVOLVING LOAN FUND FOR CREDIT
UNIONS
0
1. The authority citation for part 705 continues to read as follows:
Authority: 12 U.S.C. 1756, 1757(5)(D), and (7)(I), 1766, 1782,
1784, 1785 and 1786.
0
2. Revise Sec. 705.1(c) through (e) to read as follows:
Sec. 705.1 Authority, purpose, and scope.
* * * * *
(c) NCUA's policy is to revolve the loan funds to credit unions as
often as practical in order to achieve maximum economic impact on as
many credit unions as possible.
(d) The financial awards provided to credit unions through the Fund
will better enable them to support the communities in which they
operate; provide basic financial services to low-income residents of
these communities, and result in more opportunities for the residents
of those communities to improve their financial circumstances.
(e) The Fund is intended to support the efforts of credit unions
through loans and technical assistance grants needed for:
(1) Providing basic financial and related services to residents in
their communities;
(2) Enhancing their capacity to better serve their members and the
communities in which they operate; and
(3) Responding to emergencies.
0
3. Revise Sec. 705.2 to read as follows:
Sec. 705.2 Definitions.
For purposes of this part, the following terms shall have the
meanings assigned to them in this section.
Application means a form supplied by the NCUA by which a Qualifying
Credit Union may apply for a loan or a technical assistance grant from
the Fund.
Loan is an award in the form of an extension of credit from the
Fund to a Participating Credit Union that must be repaid, with
interest.
Low-income Members are those members defined in Sec. 701.34 of
this chapter.
Notice of Funding Opportunity means the Notice NCUA publishes
describing one or more loan or technical assistance grant programs or
initiatives currently being supported by the Fund and
[[Page 40200]]
inviting Qualifying Credit Unions to submit applications to participate
in the program(s) or initiatives(s).
Participating Credit Union refers to a Qualifying Credit Union that
has submitted an application for a loan or a technical assistance grant
from the Fund which has been approved by NCUA. A Participating Credit
Union shall not be deemed to be an agency, department, or
instrumentality of the United States because of its receipt of a
financial award from the Fund.
Program means the Community Development Revolving Loan Fund Program
under which NCUA makes loans and technical assistance grants available
to credit unions.
Qualifying Credit Union means a credit union that may be, or has
agreed to be, examined by NCUA, with a current low-income designation
pursuant to Sec. 701.34(a)(1) or Sec. 741.204 of this chapter or, in
the case of a non-federally insured, state-chartered credit union, a
low-income designation from a state regulator, made under appropriate
state standards with the concurrence of NCUA. Services to low-income
members must include, at a minimum, offering share accounts and loans.
Technical Assistance Grant means an award of money from the Fund to
a Participating Credit Union that does not have to be repaid.
0
4. Amend Sec. 705.5 by:
0
a. Revising the section heading and paragraph (b); and
0
b. In paragraph (h) adding the words ``security agreements (if any),''
between the words ``repayment obligations,'' and ``and covenants''.
The revisions read as follows:
Sec. 705.5 Terms and conditions for loans.
* * * * *
(b) Funding limits. NCUA will publish any applicable loan funding
limits in the applicable Notice of Funding Opportunity.
* * * * *
Sec. Sec. 705.6 and 705.7 [Redesignated as Sec. Sec. 705.7 and
705.8]
0
5. Redesignate Sec. Sec. 705.6 and 705.7 as Sec. Sec. 705.7 and
705.8, respectively.
0
6. Add new Sec. 705.6 to read as follows:
Sec. 705.6 Terms and conditions for technical assistance grants.
(a) Participating Credit Unions must comply with the terms and
conditions for technical assistance grants specified for each funding
opportunity offered under a Notice of Funding Opportunity.
(b) NCUA will establish applicable funding limits for technical
assistance grants in the Notice of Funding Opportunity.
0
7. Amend newly redesignated Sec. 705.7 by revising paragraphs (a),
(c)(4), (f), and (g) to read as follows:
Sec. 705.7 Application and award processes.
(a) Notice of Funding Opportunity. NCUA will publish a Notice of
Funding Opportunity in the Federal Register and on its Web site. The
Notice of Funding Opportunity will describe the loan and technical
assistance grant programs for the period in which funds are available.
It also will announce special initiatives, the amount of funds
available, funding priorities, permissible uses of funds, funding
limits, deadlines, and other pertinent details. The Notice of Funding
Opportunity will also advise potential applicants on how to obtain an
Application and related materials. NCUA may supplement the information
contained in the Notice of Funding Opportunity through such other media
as it determines appropriate, including Letters to Credit Unions, press
releases, direct notices to Qualifying Credit Unions, and announcements
on its Web site.
* * * * *
(c) * * *
(4) Examination information and applicable concurrence. In
evaluating a Qualifying Credit Union, NCUA will consider all
information provided by NCUA staff or state supervisory authority staff
that performed the Qualifying Credit Union's most recent examination.
In addition:
(i) NCUA will only provide a loan to a qualifying federal credit
union with the concurrence of that credit union's supervising Regional
Director; and
(ii) NCUA will only provide a loan to a qualifying state-charted
credit union with the written concurrence of the applicable Regional
Director and the credit union's state supervisory authority. A
qualifying state-chartered credit union should notify its state
supervisory authority that it is applying for a loan from the Fund
before submitting its application to NCUA. However, a qualifying state-
chartered credit union is not required to obtain concurrence before
applying for a loan. NCUA will obtain the concurrence directly from the
state supervisory authority rather than through the qualifying state-
chartered credit union. Additionally, before NCUA will provide a loan
to a qualifying state-charted credit union the credit union must make
copies of its state examination reports available to NCUA and agree to
examination by NCUA.
* * * * *
(f) Notice of award. NCUA will determine whether an application
meets NCUA's standards established by this part and the related Notice
of Funding Opportunity. NCUA will provide written notice to a
Qualifying Credit Union as to whether or not it has qualified for a
loan or technical assistance grant under this part. A Qualifying Credit
Union whose application has been denied for failure of a qualification
may appeal that decision in accordance with Sec. 705.10.
(g) Disbursement--(1) Loans. Before NCUA will disburse a loan, the
Participating Credit Union must sign the loan agreement, promissory
note, and any other loan related documents. NCUA may, in its
discretion, choose not to disburse the entire amount of the loan at
once.
(2) Technical assistance grants. NCUA will disburse technical
assistance grants in such amounts, and in accordance with such terms
and conditions, as NCUA may establish. In general, technical assistance
grants are provided on a reimbursement basis, to cover expenditures
approved in advance by NCUA and supported by receipts evidencing
payment by the Participating Credit Union.
0
8. Revise Sec. 705.9(b) to read as follows:
Sec. 705.9 Reporting and monitoring.
* * * * *
(b) Reporting--(1) Reporting to NCUA. A Participating Credit Union
must complete and submit to NCUA all required reports, at such times
and in such formats as NCUA will direct. Such reports must describe how
the Participating Credit Union has used the loan or technical
assistance grant proceeds and the results it has obtained, in relation
to the programs, policies, or initiatives identified by the
Participating Credit Union in its application. NCUA may request
additional information as it determines appropriate.
(2) Reporting to members.--(i) Loans. A Participating Credit Union
that receives a loan under this part must report on the progress of
providing needed community services to the Participating Credit Union's
members once a year, either at the annual meeting or in a written
report sent to all members. The Participating Credit Union must also
submit to NCUA the written report or a summary of the report provided
to members.
(ii) Technical assistance grants. A Participating Credit Union that
receives a technical assistance grant under this part should report on
the progress of providing needed community services to the
Participating Credit Union's members once a year, either at the
[[Page 40201]]
annual meeting or in a written report sent to all members.
* * * * *
0
9. Revise Sec. 705.10 to read as follows:
Sec. 705.10 Appeals.
(a) Appeals of non-qualification. A Qualifying Credit Union whose
application for a loan or technical assistance grant has been denied,
under Sec. 705.7(f), for failure of a qualification may appeal that
decision to the NCUA Board in accordance with the following:
(1) Within thirty days of its receipt of a notice of non-
qualification, a credit union may appeal the decision to the NCUA
Board. The scope of the NCUA Board's review is limited to the threshold
question of qualification and not the issue of whether, among qualified
applicants, a particular loan or technical assistance grant is funded.
(2) The foregoing procedure shall apply only with respect to
Applications received by NCUA during an open period in which funds are
available and NCUA has called for Applications. Any Application
submitted by an applicant during a period in which NCUA has not called
for Applications will be rejected, except for those Applications
submitted under Sec. 705.8. Any such rejection shall not be subject to
appeal or review by the NCUA Board.
(b) Appeals of technical assistance grant reimbursement denials.
Pursuant to NCUA Interpretative Ruling and Policy Statement 11-1, any
Participating Credit Union may appeal a denial of a technical
assistance grant reimbursement to NCUA's Supervisory Review Committee.
All appeals of technical assistance grant reimbursements must be
submitted to the Supervisory Review Committee within 30 days from the
date of the denial. The decisions of the Supervisory Review Committee
are final and may not be appealed to the NCUA Board.
[FR Doc. 2016-14718 Filed 6-20-16; 8:45 am]
BILLING CODE 7535-01-P