Daily Rules, Proposed Rules, and Notices of the Federal Government
Under § 701.34 of NCUA's regulations, a low income credit union (LICU) is an FCU designated as such because a majority of its membership consists of “low-income members,” as defined by the NCUA Board.
The Federal Credit Union Act (Act) provides LICUs with certain statutory relief and other benefits.
• Exemption from the statutory cap on member business lending;
• Authorization to accept non-member deposits from any source;
• Authorization to accept secondary capital; and
• Eligibility for assistance from the Community Development Revolving Loan Fund.
All of these provisions help a LICU to better serve its members and community.
Executive Order 13579 provides that independent agencies, including NCUA, should consider if they can modify, streamline, expand, or repeal existing rules to make their programs more effective and less burdensome.
Relative to these goals, the NCUA Board intends to provide regulatory relief to FCUs by improving the process for obtaining a LICU designation. Specifically, the NCUA Board believes that extending the timeframe in which a qualifying FCU may accept its LICU designation from 30 days to 90 days will make it easier for an eligible FCU to obtain its LICU designation, take advantage of the benefits afforded to LICUs, and better serve its members and community.
Additionally, the NCUA Board proposes several minor, nonsubstantive revisions to NCUA's insurance regulation. The technical corrections are necessary to reflect current agency practice in this regard.
Under the current rule, NCUA notifies an FCU that it qualifies for LICU designation if, based on examination data, NCUA determines that a majority of the FCU's membership are low-income members.
The NCUA Board is aware that some FCUs believe that the LICU designation process is burdensome in some cases. In particular, some FCUs have stated that the 30-day timeframe to accept the LICU designation is too short for some credit unions. For example, it may take an FCU longer than 30 days to fully analyze if it wishes to accept the LICU designation or to obtain any necessary approval from its board of directors. Accordingly, the proposed rule would allow an FCU 90 days from the date of receipt of NCUA notification to provide written notice to NCUA that it wishes to receive the LICU designation. The NCUA Board believes this extra time will ease the burden of responding.
NCUA plans to notify FCUs of their eligibility on a periodic basis. An FCU that does not or is not able to respond to a particular NCUA notification in a timely manner will have additional opportunities to accept the designation in the future. Additionally, an FCU can relinquish its LICU status at any time, for any reason, simply by notifying NCUA in writing that it wishes to do so. While the NCUA Board believes such designation is advantageous to eligible FCUs, it proposes to make it just as easy to relinquish the designation as it is to accept it. An FCU that accepts the designation only needs to accept it once, after which NCUA will not send additional notifications.
The NCUA Board also proposes minor technical corrections to NCUA's insurance regulation to update and conform it to current agency practice.
The proposal does not create any new regulatory burdens for credit unions. To the contrary, as mentioned above, the NCUA Board seeks to provide regulatory relief to FCUs that qualify for LICU designation. Similarly, the proposed changes to NCUA's insurance regulation are minor, nonsubstantive, and merely technical in nature. The technical amendments do not create any new or substantive requirements for credit unions.
The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a proposed rule may have on a substantial number of small entities (primarily those under ten million dollars in assets). This proposed rule would make nonsubstantive technical amendments and extend regulatory relief to FCUs. NCUA has determined and certifies that this proposed rule will not have a significant economic impact on a substantial number of small credit unions.
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.
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 proposed rule would 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 proposed rule does not constitute a policy that has federalism implications for purposes of the executive order.
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).
NCUA's goal is to promulgate clear and understandable regulations that impose minimal regulatory burden. We request your comments on whether this proposed rule is understandable and minimally intrusive if implemented as proposed.
Credit, Credit unions, Reporting and recordkeeping requirements.
Credit, Credit unions, Reporting and recordkeeping requirements, Share insurance.
For the reasons stated above, NCUA proposes to amend 12 CFR parts 701 and 741 as follows:
1. The authority citation for part 701 continues to read as follows:
12 U.S.C. 1752(5), 1757, 1765, 1766, 1781, 1782, 1787, 1789; Title V, Pub. L. 109-351, 120 Stat. 1966.
2. Revise § 701.34(a)(1) to read as follows:
3. The authority citation for part 741 continues to read as follows:
12 U.S.C. 1757, 1766(a), 1781-1790, and 1790d; 31 U.S.C. 3717.
4. Amend § 741.204 by:
a. Removing the words “the appropriate regional director” wherever they appear and adding in their place the word “NCUA”.
b. Removing the words “the NCUA Regional Director” wherever they appear and adding in their place the word “NCUA”.
c. Removing the words “the appropriate NCUA Regional Director” wherever they appear and adding in their place the word “NCUA”.