[Federal Register Volume 83, Number 108 (Tuesday, June 5, 2018)]
[Rules and Regulations]
[Pages 25881-25882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-11946]



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 Rules and Regulations
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
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  Federal Register / Vol. 83, No. 108 / Tuesday, June 5, 2018 / Rules 
and Regulations  

[[Page 25881]]



NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Parts 702 and 723

RIN 3133-AE89


Commercial Lending

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: The NCUA Board (Board) is amending the definition of member 
business loan (MBL) in its MBL rule with respect to 1- to 4- family 
dwellings. This regulatory change conforms to a recent amendment to the 
Federal Credit Act (FCU Act) by the Economic Growth, Regulatory Relief, 
and Consumer Protection Act (Economic Growth Act).

DATES: This rule is effective June 5, 2018.

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

SUPPLEMENTARY INFORMATION:

I. Background
II. Good Cause Exception
III. Regulatory Procedures

I. Background

    On May 24, 2018, the President signed the Economic Growth Act,\1\ 
which among other things, amended the definition section of the MBL 
provisions of the FCU Act.\2\ Prior to the Economic Growth Act, the FCU 
Act defined an MBL, in relevant part, as any loan, line of credit, or 
letter of credit, the proceeds of which will be used for a commercial, 
corporate or other business investment property or venture, or 
agricultural purpose but does not include an extension of credit that 
is fully secured by a lien on a 1-to 4- family dwelling that is the 
primary residence of a member.\3\
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    \1\ Economic Growth, Regulatory Relief, and Consumer Protection 
Act, S.2155, 115th Cong. (2018).
    \2\ Id. at sec. 105.
    \3\ 12 U.S.C. 1757a(c)(1)(B)(i).
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    The Economic Growth Act removed from that definition the words 
``that is the primary residence of a member.'' As a result, the 
definition of an MBL now excludes all extensions of credit that are 
fully secured by a lien on a 1- to 4- family dwelling regardless of the 
borrower's occupancy status. Because these kinds of loans are no longer 
considered MBLs, they do not count towards the aggregate MBL cap 
imposed on each federally insured credit union by the FCU Act.
    This statutory amendment became effective upon enactment of the 
Economic Growth Act. The Board is issuing this final rule to conform 
the NCUA's MBL rule to the revised FCU Act.
    This final rule also revises the NCUA's Prompt Corrective Action 
rule, part 702,\4\ by amending outdated citations to the NCUA's MBL 
rule. These changes are technical in nature and will not have any 
substantive effect.
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    \4\ 12 CFR part 702.
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II. Good Cause Exception

    The Board is issuing this rule as final, without having first 
provided notice and an opportunity for public comment because the NCUA 
for good cause finds that notice and public procedure thereon are 
impracticable, unnecessary, or contrary to the public interest pursuant 
to the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(3)(B). This 
rule implements a mandated statutory change that provides the NCUA with 
no choice and no discretion. The Board finds these reasons are good 
cause to dispense with the APA's notice and comment requirements.

III. Regulatory Procedures

1. Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501, et seq.) (PRA), the NCUA may not conduct or 
sponsor, and the respondent is not required to respond to, an 
information collection unless it displays a currently valid Office of 
Management and Budget (OMB) control number. The information collection 
requirements associated with part 723 are currently approved by OMB and 
assigned OMB control number 3133-0101. This rule will not impose any 
new paperwork burdens or amend existing paperwork burdens, as defined 
by the PRA.

2. Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA) provides generally for congressional review of agency rules. A 
reporting requirement is triggered in instances where the NCUA issues a 
final rule as defined by Section 551 of the APA. The NCUA believe this 
final rule is ``major'' within the meaning of the relevant sections of 
SBREFA. The NCUA has submitted the rule to the Office of Management and 
Budget for its determination in that regard.

3. Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. The 
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. The final rule does not have substantial direct 
effects 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. The NCUA has 
therefore determined that this final rule does not constitute a policy 
that has federalism implications for purposes of the executive order.

4. Assessment of Federal Regulations and Policies on Families

    The NCUA has determined that this 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

12 CFR Part 702

    Credit unions, Reporting and recordkeeping requirements.

12 CFR Part 723

    Credit, Credit unions, Reporting and recordkeeping requirements.



[[Page 25882]]


    By the National Credit Union Administration Board on May 30, 
2018.
Gerard Poliquin,
Secretary of the Board.
    For the reasons discussed above, the NCUA amends 12 CFR parts 702 
and 723 as follows:

PART 702--CAPITAL ADEQUACY

0
1. The authority citation for part 702 continues to read as follows:

    Authority: 12 U.S.C. 1766(a), 1790d.


Sec.  702.104  [Amended]

0
2. In Sec.  702.104, amend paragraphs (a), (b), and (g) by removing the 
citation ``12 CFR 723.1'' and adding in its place ``12 CFR 723.8(b)'' 
and by removing the citation ``12 CFR 723.20'' and adding in its place 
``12 CFR 723.10'' wherever they appear.

PART 723--MEMBER BUSINESS LOANS; COMMERCIAL LENDING

0
3. The authority citation for part 723 continues to read as follows:

    Authority: 12 U.S.C. 1756, 1757, 1757A, 1766, 1785, 1789.

0
4. In Sec.  723.8, add paragraph (b)(3) and revise paragraph (c) to 
read as follows:


Sec.  723.8  Aggregate member business loan limit; exclusions and 
exceptions.

* * * * *
    (b) * * *
    (3) Any loan that is fully secured by a lien on a 1- to 4- family 
dwelling.
    (c) Exception. Any loan secured by a vehicle manufactured for 
household use that will be used for a commercial, corporate, or other 
business investment property or venture, or agricultural purpose, is 
not a commercial loan but it is a member business loan (if the 
outstanding aggregate net member business loan balance is $50,000 or 
greater) and must be counted toward the aggregate limit on a federally 
insured credit union's member business loans.
* * * * *
[FR Doc. 2018-11946 Filed 6-4-18; 8:45 am]
BILLING CODE 7535-01-P