[Federal Register Volume 63, Number 209 (Thursday, October 29, 1998)]
[Proposed Rules]
[Pages 57938-57942]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28875]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Chapter VII
Prompt Corrective Action
AGENCY: National Credit Union Administration (NCUA).
ACTION: Advance notice of proposed rulemaking.
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SUMMARY: The National Credit Union Administration (NCUA) requests
public comment on development of a system of ``prompt corrective
action'' to be taken by NCUA when a federally-insured credit union
becomes undercapitalized. A new provision of the Federal Credit Union
Act, as added by the Credit Union Membership Access Act, requires the
NCUA Board to adopt, by regulation, a system of prompt corrective
action indexed to each of five capital categories which the new
provision establishes for federally-insured credit unions. Much of the
system of prompt corrective action either is already prescribed by the
new provision itself or is required to be comparable with the system
Congress established for other federally-insured financial institutions
in 1991. However, Congress has left to NCUA the responsibility to
develop implementing regulations for certain components of the system
of prompt corrective action which are unique to credit unions.
Information and comments from interested parties on these specific
components will assist NCUA in carrying out its mandate to implement a
system of prompt corrective action.
DATES: Comments must be received on or before January 27, 1999.
ADDRESSES: Direct comments to Becky Baker, Secretary of the Board. Mail
or hand-deliver comments to: National Credit Union Administration, 1775
Duke Street, Alexandria, Virginia 22314-3428. Fax comments to (703)
518-6319. Please send comments by one method only.
FOR FURTHER INFORMATION CONTACT: Herbert S. Yolles, Deputy Director,
Office of Examination and Insurance, at the above address or telephone
(703) 518-6362; or Steven W. Widerman, Trial Attorney, Office of
General Counsel, at the above address or telephone (703) 518-6557.
SUPPLEMENTARY INFORMATION:
A. Background
On August 7, 1998, Congress enacted the Credit Union Membership
Access Act (CUMAA), Pub. L. No. 105-219, 112 Stat. 913 (1998). Section
103 of CUMAA added a new section 216 to the Federal Credit Union Act
(FCUA), to be codified as 12 U.S.C. 1790d. New section 216(b)(1)
requires the NCUA Board to adopt by regulation a system of ``prompt
corrective action'' to be taken by NCUA when a federally-insured
``natural person'' credit union becomes undercapitalized. Congress
requires NCUA's system of prompt corrective action to be ``comparable''
to the system it prescribed for the other federally-insured financial
institutions in 1991 under section 38 of the Federal Deposit Insurance
Act (FDIA Sec. 38), 12 U.S.C. 1831o, as added by section 131 of the
Federal Deposit Insurance Corporation Improvement Act, Pub. L. No. 102-
242, 105 Stat. 2236 (1991).
Many of the regulations that will comprise NCUA's system of prompt
corrective action are not open to substantive discretion in rulemaking.
Section 216 (c) through (i) itself prescribes the substance of much of
NCUA's system of prompt corrective action. To satisfy the requirement
of ``comparability'' with FDIA Sec. 38, NCUA's regulations will
generally parallel those adopted by the other Federal banking agencies
pursuant to FDIA Sec. 38,\1\ to the extent such regulations are
applicable to credit unions. However, Congress has left to NCUA the
responsibility for originating implementing regulations for certain
components of the system of prompt corrective action which are unique
to credit unions and, thus, were not addressed in FDIA Sec. 38. New
Sec. 216 (b)(2) and (d). The components on which NCUA seeks comment
are:
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\1\ The Federal banking agencies consist of the Federal Reserve
Board, the Office of Comptroller of the Currency, the Federal
Deposit Insurance Corporation (FDIC) and the Office of Thrift
Supervision. New Sec. 216(o)(1) incorporating 12 U.S.C. 1813(z).
Their Joint Final Rule establishing a system of prompt corrective
action pursuant to FDIA Sec. 38 is published at 57 FR 44886 (Sept.
29, 1992).
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1. The definition of a ``complex'' credit union;
2. The design of a ``risk-based net worth requirement'' to apply to
``complex'' credit unions;
3. The design of an alternative system of prompt corrective action
for ``new'' credit unions (defined as less than 10 years old and having
less than $10 million in assets); and
4. The criteria for an acceptable Net Worth Restoration Plan for
under-capitalized credit unions.
[[Page 57939]]
New Sec. 216 (b)(2)(d) and (f)(5). NCUA seeks comment on these
components. An opportunity to address all of the components of prompt
corrective action will be provided in 1999 when NCUA issues proposed
rules for comment.
B. Timetable
Congress has set a timetable for NCUA to propose for comment, and
to finally adopt, implementing regulations for section 216. For all
implementing regulations except those regarding the ``risk-based net
worth requirement'' for ``complex'' credit unions, NCUA is required to
propose rules no later than May 26, 1999, and to adopt final rules no
later than February 7, 2000, which would become effective August 7,
2000. CUMAA Sec. 301 (d)(1) and (e)(1).
A different timetable applies to implementing regulations for a
single component of the prompt corrective action--the ``risk-based net
worth requirement'' for ``complex'' credit unions. Congress requires
NCUA to precede its proposed and final implementing rules with an
Advance Notice of Proposed Rulemaking (ANPR) soliciting public comment
on the ``risk-based net worth requirement'' only, to be published no
later than February 3, 1999. CUMAA Sec. 301(d)(2)(A). To fulfill that
requirement, NCUA publishes this ANPR soliciting public comment not
only on the ``risk-based net worth requirement'' for ``complex'' credit
unions, but also on other components of prompt corrective action,
unique to credit unions, for which Congress has directed NCUA to
originate implementing regulations. No date is prescribed for proposing
rules on the ``risk-based net worth requirement,'' but NCUA is required
to adopt final rules no later than August 7, 2000, which would become
effective January 1, 2001. CUMAA Sec. 301 (d)(2)(B) and (e)(2).
Broad public input addressing these components will assist the NCUA
Board in tailoring a system of prompt corrective action that is
workable, fair and effective in light of the cooperative character of
credit unions. See S. Rep. No. 193, 105th Cong., 2d Sess. 14 (1998) (S.
Rep.).
C. Framework of Section 216
Like FDIA Sec. 38, new section 216(c) establishes a framework of
five capital categories based on the ratio of a credit union's net
worth.\2\ New section 216(e) through (i) then mandates specific prompt
corrective actions indexed to each of the lower four categories. Most
such actions impose progressively more stringent restrictions and
requirements on credit unions; others permit or require NCUA to take
administrative action, including conservatorship and liquidation.
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\2\ ``Net worth ratio'' is defined as the ratio of a credit
union's net worth to its total assets. New Sec. 216(o)(3). The ``net
worth'' of a credit union (other than a low-income credit union) is
defined as its retained earnings balance as determined under GAAP.
New Sec. 216(o)(2)(A). Under GAAP, retained earnings consists of
undivided earnings, statutory reserves, and other appropriations as
defined by management or regulatory authorities. AICPA, Audit &
Accounting Guide: Audits of Credit Unions at Sec. 11.01 (1998).
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1. Well Capitalized. A credit union is ``well capitalized'' if it
has a net worth ratio of 7% or greater and, if it meets the definition
of a ``complex'' credit union, also satisfies an additional ``risk-
based net worth requirement.'' New Sec. 216(c)(1)(A). A ``well
capitalized'' credit union is not subject to any type of prompt
corrective action under section 216.
2. Adequately Capitalized. A credit union is ``adequately
capitalized'' if it has a net worth ratio of 6% or greater and, if it
meets the definition of a ``complex'' credit union, also satisfies an
additional ``risk-based net worth requirement.'' New Sec. 216(c)(1)(B).
To improve capital, an ``adequately capitalized'' credit union must
annually set aside as net worth an amount equal to at least 0.4% of its
total assets. New Sec. 216(e). This is the only prompt corrective
action required of a credit union that is ``adequately capitalized''
but not ``well capitalized.''
3. Undercapitalized. A credit union is ``undercapitalized'' if it
has a net worth ratio of less than 6% or, if it meets the definition of
a ``complex'' credit union, fails to satisfy an additional ``risk-based
net worth requirement.'' New Sec. 216(c)(1)(C). In addition to annually
setting aside as net worth an amount equal to at least 0.4% of its
total assets, an ``undercapitalized'' credit union also must timely
submit and implement a Net Worth Restoration Plan which is accepted by
the NCUA Board; must not allow its average total assets to increase
unless and at a rate permitted by its Plan; and cannot increase the
total amount of member business loans outstanding at any one time. New
Sec. 216(f)(1) and (g).
4. Significantly Undercapitalized. A credit union is
``significantly undercapitalized'' if it has a net worth ratio of less
than 4%. However, a credit union which has a net worth ratio of between
4% and 4.99%, and otherwise would be ``undercapitalized,'' will instead
be classified ``significantly undercapitalized'' if it has failed to
timely submit or implement a Net Worth Restoration Plan acceptable to
the NCUA Board (see infra section E.4.). New Sec. 216(c)(1)(D). A
``significantly undercapitalized'' credit union is subject to all of
the same prompt corrective actions as one which is
``undercapitalized.'' But in addition, NCUA is given the discretion to
conserve or liquidate that credit union if it finds no reasonable
prospect that it will become ``adequately capitalized.'' New
Secs. 206(h)(1)(F) and 207(a)(3)(A)(i) as added by CUMAA
Sec. 301(b)(1)(A)(iii) and (b)(2)(B).
5. Critically Undercapitalized. A credit union is ``critically
undercapitalized'' if it has a net worth ratio of less than 2%. New
Sec. 216(c)(1)(E). A ``critically undercapitalized'' credit union is
subject to all of the same prompt corrective actions as one which is
``significantly undercapitalized'' except that NCUA may now conserve or
liquidate that credit union regardless whether there is a reasonable
prospect that it will become ``adequately capitalized.'' New
Secs. 206(h)(1)(G) and 207(a)(3)(A)(ii) as added by CUMAA
Sec. 301(b)(1)(A)(iii) and (b)(2)(B). In addition, a ``critically
undercapitalized'' credit union is subject to a timetable that, absent
improvement in capital, leads to mandatory conservatorship or
liquidation. Within 90 days of becoming ``critically
undercapitalized,'' NCUA must either conserve or liquidate that credit
union or ``take such other action . . . [that] would better achieve the
purpose of [section 216], after documenting why the action would better
achieve that purpose.'' New Sec. 216(i)(1). NCUA's determination to
take ``such other action'' in lieu of conservatorship or liquidation
expires in 180 days. If that determination is not renewed, the credit
union must be conserved or liquidated. New Sec. 216(i)(2). If, after
two renewals (i.e., 18 months after first becoming ``critically
undercapitalized''), the credit union remains ``critically
underapitalized,'' on average, for a full calendar quarter, NCUA must
liquidate unless the credit union (i) has been complying with a Net
Worth Restoration Plan since the date it was approved; (ii) has
positive net income or a sustainable upward trend in earnings; and
(iii) is viable and not expected to fail. New Sec. 216(i)(3).
D. Required Comparability With FDIA Section 38
1. Comparability
New section 216 is modeled on section 38 of the Federal Deposit
Insurance Act, 12 U.S.C. 1831o. Beginning in 1992, that provision
mandated a system of prompt corrective
[[Page 57940]]
action to apply to all FDIC-insured depository institutions. The
purpose of prompt corrective action for federally-insured credit unions
is to resolve problems at the least possible long-term loss to the
National Credit Union Share Insurance Fund (the Fund). New
Sec. 216(a)(1). To carry out that purpose, Congress requires the NCUA
Board to adopt regulations establishing a system of prompt corrective
action that, in addition to being consistent with section 216, is
``comparable to section 38 of the Federal Deposit Insurance Act.'' \3\
New 216(b)(1)(A); S. Rep. at 12; H.R. Rep. No. 472, 105th Cong., 2d
Sess. 23 (1998) (H.R. Rep. at 23).
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\3\ To this end, in developing regulations to implement new
section 216, the NCUA Board is required to consult with the
Secretary of the Treasury, the other Federal banking agencies (which
apply prompt corrective action under FDIA Sec. 38), and State
officials having jurisdiction over State-chartered, federally-
insured credit unions. CUMAA Sec. 301(c).
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``Comparable `` is defined as ``parallel in substance (though not
necessarily identical in detail) and equivalent in rigor.'' S. Rep. at
12. NCUA interprets this to mean that its implementing regulations for
section 216 should parallel those adopted by the Federal banking
agencies to implement FDIA Sec. 38, to the extent the latter
regulations apply to credit unions. Conversely, NCUA's regulations will
exclude prompt corrective actions under FDIA Sec. 38 which are
inapplicable to credit unions, such as requiring the sale of stock or
subordinated debt to recapitalize or undergo a merger or acquisition,
prohibiting the acceptance of deposits from correspondent institutions,
requiring a bank holding company to obtain approval before making a
capital distribution, and requiring divestiture of an institution. See
U.S. Dept. of Treasury, Credit Unions (Washington, D.C. 1997) at 76
(Treasury Rep.).
NCUA invites commenters to identify the prompt corrective actions
under FDIA Sec. 38 which they believe do not apply to credit unions and
should be excluded from NCUA's implementing regulations, as well as to
address the components of prompt corrective action under section 216
which have no analog in FDIA Sec. 38.
2. Report to Congress
To the extent that NCUA's prompt corrective action regulations are
not parallel with an applicable provision of FDIA Sec. 38, the NCUA
Board is required to report that difference to Congress. The report to
Congress must ``specifically explain . . . how the regulations differ
from [FDIA Sec. 38], and the reasons for those differences.'' \4\ CUMAA
Sec. 301(f); S. Rep. at 19; H.R. Rep. at 23. The report to Congress
must be submitted either when the NCUA Board proposes its regulations
for all but the ``risk-based net worth requirement'' (on or before May
26, 1999), or when it finally adopts such regulations (on or before
February 7, 2000).
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\4\ The Report to Congress also must explain how NCUA's
regulations take into account the cooperative character of credit
unions, i.e., that credit unions are not-for-profit cooperatives
that do not issue stock, must rely on retained earnings to build net
worth, and have boards of directors that consist primarily of
volunteers. New Sec. 216(b)(1)(B).
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E. Components of Prompt Corrective Action Unique to Credit Unions
1. Definition of a ``Complex'' Credit Union
To be classified either ``well capitalized'' or ``adequately
capitalized,'' a credit union that is deemed ``complex'' must satisfy a
prescribed ``risk-based net worth requirement'' in addition to the
corresponding statutory net worth ratio. New Sec. 216(c)(1)(A)(ii) and
(B)(ii). Similarly, a credit union that is deemed ``complex'' will be
classified as ``undercapitalized'' if it fails to meet a prescribed
``risk-based net worth requirement,'' regardless whether it meets the
corresponding statutory net worth ratio. New Sec. 216(c)(1)(C)(ii). To
set up this ``gateway'' for imposing the ``risk-based net worth
requirement,'' new section 216 requires the NCUA Board to define a
``complex'' credit union ``based on the portfolios of assets and
liabilities of credit unions.'' New Sec. 216(d)(1).
FDIA Sec. 38 gives no guidance in defining a ``complex'' credit
union because it draws no distinction between ordinary and complex
depository institutions; indeed, a ``risk-based capital requirement''
applies to all such institutions in all but the ``critically
undercapitalized'' category. Joint Final Rule, 57 FR 44870 (Sept. 28,
1992). NCUA believes that the definition of a ``complex'' credit union
should incorporate objective, risk-related numerical standards, derived
from a credit union's balance sheet. This would serve the interests of
uniformity and efficiency in two ways. First, credit unions would not
be subject to unequal treatment as a result of subjective
``complexity'' determinations by NCUA and State credit union
supervisors. Second, credit unions would be able to determine for
themselves where they stand with respect to being deemed ``complex'' or
not.
NCUA encourages commenters to address possible criteria for
defining a credit union as ``complex'' according to the risk level of
its portfolio of assets and liabilities. The following might be
considered examples of such criteria:
(i) Investments. Whether the credit union's securities portfolio is
subject to NCUA's 300 basis point ``shock test'' required when the sum
of the fair value of ``certain fixed and variable rate securities'' \5\
the credit union holds exceeds its net capital, 12 CFR 703.90(b)-(c);
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\5\ Such securities are defined as having embedded options; or
remaining maturities greater than three years; or coupon formulas
that are related to more than one index or are inversely related to,
or multiples of, an index. 12 CFR 703.90(b).
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(ii) Lending. Whether the credit union's portfolio exceeds a
certain threshold ratio of fixed-rate real estate mortgages;
(iii) Borrowing. Whether the credit union has exceeded a certain
threshold ratio of borrowed funds; and
(iv) CAMEL Components. Whether the ``Capital'' and/or ``Asset''
components of the credit union's CAMEL rating are rated ``4'' or ``5.''
2. ``Risk-based Net Worth Requirements''
For each of the top three capital categories--``well capitalized,''
``adequately capitalized'' and ``undercapitalized''--the NCUA Board is
required to establish a separate ``risk-based net worth requirement''
that applies to credit unions that are deemed ``complex.'' New
Sec. 216(d)(1); compare 12 U.S.C. 1831o(c)(1)(A). The ``risk-based net
worth requirement'' must ``take account of any material risks against
which the [6% net worth ratio required to be ``adequately
capitalized''] may not provide adequate protection.'' New
Sec. 216(d)(2). To this end, NCUA will consider whether a credit union
having a 6% net worth ratio is adequately protected against interest
rate risk, market risks, credit risk, risks posed by contingent
liabilities, and other relevant risks. S. Rep. at 14. The design of the
risk-based net worth requirement will reflect a reasoned judgment about
the actual risks involved. Id.
FDIA Sec. 38 required the Federal banking agencies to develop a
``risk-based capital requirement'' to include among the ``relevant
capital measures'' used to classify insured institutions among the five
capital categories. 12 U.S.C. 1831o(c)(1). To fulfill that requirement,
the Federal banking agencies adopted two separate measures which are
independent of the ``leverage ratio'' (the equivalent of ``net worth
ratio'')--the ``ratio of total capital to risk-weighted assets'' and
the ``ratio of
[[Page 57941]]
Tier 1 capital to risk-weighted assets.'' \6\ 57 FR at 44870.
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\6\ The total risk-based capital ration is set at 500 basis
points above the leverage ration for the ``well capitalized''
category, and at 400 basis points above the leverage ratio for the
``adequately capitalized'' and ``undercapitalized categories. The
Tier-1 risk-based capital ratio is set at 100 basis points above the
leverage ratio for the ``well capitalized'' category, and at the
same level as the leverage ratio for the ``adequately capitalized''
and ``undercapitalized'' categories. 57 FR at 44867.
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NCUA is considering a ``risk-based net worth requirement'' that
consists of a basis points (b.p.) add-on to the existing statutory net
worth ratio for each of the ``well capitalized,'' ``adequately
capitalized'' and ``undercapitalized'' categories. The amount of the
add-on would not necessarily be the same for each category. For
example, a uniform 100 b.p. increase in the net worth ratio for each
category would be reflected as follows. An otherwise ``well
capitalized'' credit union (having a net worth ratio of 7% or greater)
that is deemed ``complex'' would be required to achieve a net worth
ratio of 8% or greater (7% statutory net worth ratio + 100 b.p. ``risk-
based net worth requirement'') to be classified ``well capitalized.''
An otherwise ``adequately capitalized'' credit union (having a net
worth ratio of 6% or greater) that is deemed ``complex'' would be
required to achieve a net worth ratio of 7% or greater (6% statutory
net worth ratio + 100 b.p. ``risk-based net worth requirement'') to be
classified ``adequately capitalized.'' Conversely, an otherwise
``undercapitalized'' credit union (having a net worth ratio of less
than 6%) that is deemed ``complex'' still would be ``undercapitalized''
unless it achieved a net worth ratio of 7% (6% statutory net worth
ratio + 100 b.p. ``risk-based net worth requirement'').
NCUA invites comment on the concept of supplementing applicable
statutory net worth ratios, on the notion of establishing risk-weighted
ratios that are independent of the statutory net worth ratios, as well
as alternative designs for a ``risk-based net worth requirement.''
3. Alternative Rules for ``New'' Credit Unions
For ``new'' credit unions, the NCUA Board is required to prescribe
an alternative system of prompt corrective action to apply in lieu of
the system prescribed by section 216 for existing credit unions. New
Sec. 216(b)(2)(A); see also Treasury Rep. at 79. The alternative system
of prompt corrective action for ``new'' credit unions must be designed
to:
(i) Carry out the purpose of section 216, i.e., to solve problems
at the least possible long-term loss to the Fund;
(ii) Recognize that new credit unions initially have no net worth,
and give them reasonable time to accumulate net worth;
(iii) Create incentives for new credit unions to become adequately
capitalized by the time they either have been in operation for more
than 10 years or have more than $10 million in total assets;
(iv) Impose appropriate restrictions and requirements on new credit
unions that do not make sufficient progress toward becoming adequately
capitalized; and
(v) Prevent evasion of the purpose of section 216 (e.g., an
existing credit union merges with a smaller, new credit union and
classifies itself as a ``new'' credit union to avoid the requirements
of section 216).
New Sec. 216(b)(2)(B).
Section 216(o)(4) defines a ``new'' credit union as having been in
operation for less than 10 years and having $10 million or less in
total assets. This is a significant expansion of the definition in
section 116 of the FCUA, which CUMAA repeals. CUMAA Sec. 301(g)(3).
Section 116 defined a ``new'' credit union as having been in operation
less than 4 years or having assets of less than $500,000. 12 U.S.C.
1762(a)(2).
Under section 116, a ``new'' credit union was required to set aside
10% of gross income until its regular reserve (i.e., capital) reached
7.5% of total outstanding loans and risk assets, and thereafter to set
aside 5% of gross income until the regular reserve reached 10% of total
outstanding loans and risk assets. Id.; see also 12 CFR 702.2(a); U.S.
Dept. of Treasury, Modernizing The Financial System (Washington, D.C.
1991) at XIII-3. Under section 216(e), existing credit unions that are
less than ``well capitalized'' ordinarily are required to annually set
aside as net worth an amount equal to at least 0.4% of total assets
until attaining a net worth ratio of 7%.\7\ The conceptual distinction
between old section 116 and new section 216 is that under the former
the reserve transfer was calculated as a percentage of gross income,
under the latter it is calculated as a percentage of total assets.
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\7\ Section 216(e)(2)(A) gives the NCUA Board the authority to
adjust the amount of the 0.4% reserve transfer, on a case-by-case
basis, if necessary to avoid a significant redemption of shares and
to further the purpose of section 216.
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NCUA proposes to establish a graduated timetable to allow ``new''
credit unions to build capital toward the statutory net worth level for
each capital category. NCUA solicits comment on whether to adopt the
same approach as section 216 now mandates for improving the capital of
existing credit unions--requiring a ``new'' credit union to annually
set aside as net worth a certain percentage total assets. New
Sec. 216(e). The percentage of the annual transfer to net worth might
be reduced progressively as the ``new'' credit union attains a higher
capital category.
4. Net Worth Restoration Plan
Any credit union which is ``undercapitalized'', ``significantly
undercapitalized'' or ``critically undercapitalized'' must, among other
prompt corrective actions, submit an acceptable Net Worth Restoration
Plan (the Plan) to the NCUA Board. New Sec. 216(f)(1). The Plan is
required to be submitted within a reasonable time prescribed by the
NCUA Board, which must act expeditiously to decide whether the Plan is
acceptable. New Sec. 216(f)(3). The NCUA Board may accept a Plan only
if it determines that the Plan ``is based on realistic assumptions and
is likely to succeed in restoring the net worth of the credit union.''
New Sec. 216(f)(5). Apart from this standard, the NCUA Board needs to
establish criteria for credit unions to rely upon in preparing a Plan
that will be ``acceptable.''
FDIA Sec. 38 requires an undercapitalized institution to submit a
``capital restoration plan'' (capital plan) which specifies:
(i) Steps the institution will take to become ``adequately
capitalized'';
(ii) The levels of capital the institution expects to attain in
each year that the plan is in effect;
(iii) How the institution will comply with the prompt corrective
action restrictions and requirements imposed under FDIA Sec. 38; and
(iv) The types and levels of activities in which the institution
will engage.
12 U.S.C. 1831o(e)(2)(B)(i). To be accepted, a capital plan must
meet the following statutory criteria:
(i) Contain the statutorily-required information described
above;
(ii) Be based on realistic assumptions and be likely to succeed
in restoring the institution's capital; and
(iii) Would not appreciably increase risk (including credit
risk, interest rate risk, and other types of risk) to which the
institution is exposed.
12 U.S.C. 1831o(e)(2)(C)(i). Although FDIA Sec. 38 authorized
the Federal banking agencies to adopt regulations requiring a
capital plan to include additional information, the agencies
declined to do so. 57 FR at 44878.
Section 216(f)(5) prescribes for a Net Worth Restoration Plan
only one of FDIA Sec. 38's criteria--that the Plan be based on
realistic assumptions and be likely to succeed in
[[Page 57942]]
restoring a credit union's capital. NCUA seeks comment on whether to
add, by regulation, all or a combination of some of the other FDIA
Sec. 38 content prerequisites and acceptability criteria enumerated
above, and on the time frame for submitting and implementing a Net
Worth Restoration Plan. In addition, NCUA welcomes input on this
model generally, as well as on alternative and/or additional content
prerequisites and acceptability requirements for credit union Net
Worth Restoration Plans.
By the National Credit Union Administration Board on October 22,
1998.
Becky Baker,
Secretary of the Board.
[FR Doc. 98-28875 Filed 10-28-98; 8:45 am]
BILLING CODE 7535-01-U
