[Federal Register Volume 63, Number 209 (Thursday, October 29, 1998)]
[Proposed Rules]
[Pages 57945-57950]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28879]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 711
Management Official Interlocks
AGENCY: National Credit Union Administration.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The National Credit Union Administration (NCUA) proposes to
revise its rule regarding management interlocks. The proposal conforms
the interlocks rule to recent statutory changes, and was drafted
through a coordinated effort among the following other federal
financial regulatory agencies; the Comptroller of the Currency (OCC);
Board of Governors of the Federal Reserve System (Board); Federal
Deposit Insurance Corporation (FDIC); and Office of Thrift Supervision
[[Page 57946]]
(OTS). The proposal also modernizes and clarifies the rule, and reduces
unnecessary regulatory burdens where feasible, consistent with
statutory requirements.
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. E-mail comments to boardmail@ncua.gov. Please send comments
by one method only.
FOR FURTHER INFORMATION CONTACT: Dianne M. Salva, Staff Attorney,
Division of Operations, Office of General Counsel, at the above address
or telephone: (703) 518-6540.
SUPPLEMENTARY INFORMATION:
I. Background
The Depository Institution Management Interlocks Act (12 U.S.C.
3201-3208) (the Interlocks Act) generally prohibits financial
institution management officials from serving simultaneously with two
unaffiliated depository institutions or their holding companies
(depository organizations). The Interlocks Act exempts interlocking
arrangements between credit unions and, therefore, in the case of
credit unions, only restricts interlocks between credit unions and
other institutions--banks and thrifts and their holding companies.
The scope of the prohibition depends on the size and location of
the involved organizations. For instance, the Interlocks Act prohibits
unaffiliated depository organizations, regardless of size, from
establishing an interlock if both organizations have an office in the
same community (the community prohibition). Unaffiliated depository
organizations may not form an interlock if both organizations have
total assets of $20 million or more and are located in the same
Relevant Metropolitan Statistical Area (RMSA) (the RMSA prohibition).
The Interlocks Act also prohibits unaffiliated depository
organizations, regardless of location, from establishing an interlock
if each organization has total assets exceeding specified thresholds
(the major assets prohibition).
Section 2210 of the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPR Act) amended Secs. 204, 206, and 209 of
the Interlocks Act (12 U.S.C. 3203, 3205 and 3207).\1\
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\1\ The OCC, the Board, the FDIC, and the OTS, (collectively,
the Agencies) have recently proposed rules similar to NCUA to
implement the EGRPR Act. 63 FR 43052 (August 11, 1998).
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Section 2210(a) of EGRPR Act amended the Interlocks Act by changing
the thresholds for the major assets prohibition under 12 U.S.C. 3203.
Prior to the EGRPR Act, management officials of depository
organizations with total assets exceeding $1 billion were prohibited
from serving as management officials of unaffiliated depository
organizations with assets exceeding $500 million, regardless of the
location of the organizations or their depository institution
affiliates.\2\ The EGRPR Act raised the thresholds to $2.5 billion and
$1.5 billion, respectively. The revision also authorized NCUA to adjust
the thresholds by regulation, as necessary to allow for inflation or
market conditions.
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\2\ The Agencies, and NCUAA, define ``total assets'' of
diversified savings and loan holding companies and bank holding
companies exempt from Sec. 4 of the Bank Holding Company Act to
include only the assets of their depository institution affiliates.
See 12 CFR 26.2(r), 212.2(q), 348.2(q), 711.2(r), and 563f.2(r).
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Section 2210(b) of the EGRPR Act permanently extended the
grandfather and diversified savings and loan holding company exemptions
in 12 U.S.C. 3205. Prior to the EGRPR Act, these exemptions were
subject to a 20-year time limit beginning November 10, 1978. The EGRPR
Act amended Sec. 3205(a) to permit persons who began dual service as
management officials of more than one depository organization before
November 10, 1978, to continue such service indefinitely. Similarly,
Sec. 3205(b) was amended to permit a person who serves as a management
official of a depository organization and of a company that is not a
depository holding company to continue to serve as an official of both
entities indefinitely if the non-depository organization becomes a
diversified savings and loan holding company. The EGRPR Act also
repealed Sec. 3205(c). That provision, which mandated agency review of
grandfathered interlocks before March 1995, became outdated.
The EGRPR Act also amended 12 U.S.C. 3207 to provide that NCUA may
adopt ``regulations that permit service by a management official that
would otherwise be prohibited by [the community, RMSA, or major assets
prohibitions], if such service would not result in a monopoly or
substantial lessening of competition.'' This change repealed the
specific ``regulatory standards'' and ``management consignment''
exemptions added by the Riegle Community Development and Regulatory
Improvement Act of 1994 (CDRI Act),\3\ and restored the NCUA's broad
authority to create regulatory exemptions to the statutory prohibitions
on interlocks.
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\3\ NCUA adopted final regulations implementing the management
interlocks provision of CDRI Act, effective October 1, 1996. See 61
FR 50702 (September 27, 1996). The Agencies also adopted final
regulations implementing the management interlocks provisions of the
CDRI Act, effective October 1, 1996. See 61 FR 40293 (August 2,
1996).
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II. Discussion of Proposed Regulations
The proposal reflects these statutory changes. This proposal also
renews an earlier proposal for a small market share exemption that had
been advanced by the FRB, OCC and FDIC before enactment of the CDRI
Act. NCUA invites comments on all aspects of this proposal.
A. Definitions
Current NCUA regulations define key terms implementing the
Interlocks Act. A number of these definitions were added or revised in
1996 to implement the CDRI Act. With the repeal of the specific
exemptive standards in the CDRI Act, two of these definitions have
become unnecessary and would be removed.
Anticompetitive Effect
The current rule defines ``anticompetitive effect'' as a ``monopoly
or substantial lessening of competition.'' Under the new statutory
scheme, the substance of this definition is the sole criterion for
gauging whether to grant an exemption under NCUA's general exemptive
authority. Because the proposed regulations would employ this phrase in
only one provision, a separate definition is unnecessary.
Critical
The current regulations use the term ``critical'' in connection
with the Regulatory Standards exemption created by the CDRI Act. Since
the EGRPR Act eliminates the Regulatory Standards exemption, a
regulatory definition of ``critical'' is unnecessary.
B. Major Assets Prohibition
Prior to the EGRPR Act, a management official of a depository
organization (or its affiliates) having total assets exceeding $1
billion could not serve as a management official of any depository
organization with total assets exceeding $500 million (or its
affiliates) regardless of location. The EGRPR Act revised the asset
thresholds for the major assets prohibition from $1 billion and $500
million to $2.5 billion and $1.5 billion, respectively. The legislation
also authorized the NCUA to adjust the threshold from time to time to
reflect inflation or market changes.
[[Page 57947]]
The proposal would amend the regulations to reflect the new
threshold amounts and add a mechanism providing for periodic
adjustments of the thresholds. The adjustment would be based on changes
in the Consumer Price Index for Urban Wage Earners and Clerical Workers
(the Consumer Price Index). In years when changes in the Consumer Price
Index would change the thresholds by more than $100 million, NCUA will
announce the change by notice published in the Federal Register in
December. NCUA also invites comment on the types of market changes that
may warrant subsequent adjustments to the major assets prohibition.
C. Regulatory Standards and Management Consignment Exemptions
The current regulations contain Regulatory Standards and Management
Consignment exemptions, which were predicated on Sec. 3207 of the CDRI
Act. The EGRPR Act removed the exemptions from the Interlocks Act and
substituted a general authority for NCUA to create exemptions by
regulation. Accordingly, these regulatory exemptions would be removed
by the proposed rule.
D. General Exemptive Authority
Section 2210(c) of the EGRPR Act authorizes NCUA to adopt
regulations permitting service by a management official that would
otherwise be prohibited by the Interlocks Act, if such service would
not result in ``a monopoly or substantial lessening of competition.''
To implement this authority, NCUA is proposing to exempt otherwise
prohibited management interlocks where the dual service would not
result in a monopoly or substantial lessening of competition and would
not otherwise threaten safety and soundness. The process for obtaining
such exemptions will be set out in an NCUA directive to credit unions.
Since 1979, when regulations implementing the Interlocks Act were
first promulgated, NCUA has recognized that interlocks involving
certain classes of depository organizations present a reduced risk to
competition, and that, by enlarging the pool of management available to
such organizations, competition could be enhanced. Thus, in the initial
interlocks rules published in 1979, NCUA reserved the authority to
permit interlocks to strengthen newly-chartered organizations, troubled
organizations, organizations in low- or moderate-income areas and
organizations controlled or managed by minorities or women. The
authority to permit interlocks in such circumstances was deemed
``necessary for the promotion of competition over the long term.'' See
44 FR 42161, 42165 (July 19, 1979). Prior to the CDRI Act, these
exemptions were granted to meet the need for qualified management. The
Management Consignment exemption under the CDRI Act was generally
available to the same four classes of organizations, but on a more
limited basis.
With the EGRPR Act's restoration of the broad exemptive authority
under the Interlocks Act, NCUA again has authority to grant exemptions
that will not adversely affect competition. NCUA believes that
interlocks involving the four classes of organizations previously
identified may provide management expertise needed to enhance the
ability of the organizations to compete. Accordingly, NCUA proposes to
establish a rebuttable presumption that an interlock would not result
in a monopoly or substantial lessening of competition, if: (1) the
depository organization is located in, and primarily serves, low- or
moderate-income areas; (2) the depository organization is controlled or
managed by members of a minority group or women; (3) the depository
institution is newly-chartered; or (4) the depository institution, or
in the case of a depository organization, a depository institution
under its control, is deemed to be in ``troubled condition'' under
regulations implementing Sec. 914 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (FIRREA) (12 U.S.C. 1831i).
A claim that factors exist giving rise to a presumption does not
preclude NCUA from denying a request for an exemption if NCUA finds,
based on available materials, that the presumption is rebutted. That
is, an exemption request may be denied if NCUA determines that the
interlock would result in a monopoly or substantial lessening of
competition. The presumptions are designed to provide greater
flexibility to classes of organizations that may have greater need for
seasoned management, but the presumptions are rebuttable because NCUA
recognizes that such needs can only be met in a manner that is
consistent with the statute.
The definitions of ``area median income'' and ``low- and moderate-
income areas'' added to the regulations in 1996 to implement the CDRI
Act amendments are being retained to provide guidance as to when an
organization would qualify for one of the presumptions. Interlocks that
are based on the presence of a rebuttable presumption would be allowed
to continue for three years, unless otherwise provided in the approval
order. Nothing in the proposed rule would prevent an organization from
applying for an extension of an interlock exemption granted under a
presumption if the factors continued to apply. The organizations would
also be free to utilize any other exemption that may be available.
NCUA proposes that any other interlock approved under this section
be allowed to continue unless it becomes anticompetitive, unsafe or
unsound, or is subject to a condition requiring termination at a
specific time.
E. Small Market Share Exemption
In 1994, the OCC, FDIC, and FRB published notices of proposed
rulemaking seeking comment on a proposed market share exemption. The
proposed exemption would have been available for interlocks involving
institutions that, on a combined basis, would control less than 20% of
the deposits in a community or relevant MSA. These agencies published
small market share exemption proposals pursuant to the broad exemptive
authority vested in the agencies prior to the CDRI Act. Because the
CDRI Act restricted the agencies' broad rulemaking authority, the OCC,
FDIC, and FRB withdrew their proposals.\4\ The broad exemptive
authority under the EGRPR Act again authorizes the small market share
exemption. Accordingly, NCUA joins the Agencies in renewing the
proposal for the small market share exemption.
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\4\ See OCC, 59 FR 29740 (June 9, 1994), FDIC, 59 FR 18764
(April 20, 1994), and FRB, 59 FR 7909 (February 17, 1994) for
proposals prior to CDRI Act. Following enactment of the CDRI Act
these proposals were withdrawn; 60 FR 67424 (December 29, 1995) for
withdrawal by OCC and FRB; and 60 FR 7139 (February 7, 1995) for
withdrawal by the FDIC.
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The Interlocks Act, by discouraging common management among
financial institutions, seeks to prevent unaffiliated institutions from
having an adverse impact on competition in the products and services
they offer. Where depository institutions dominate a large portion of
the market, these risks are significant. When a particular market is
served by many institutions, however, the risks diminish that
depository institutions with interlocking relationships can adversely
affect the available products and services available in their markets.
NCUA believes that the combination of the shares and deposits of
two institutions provides a meaningful assessment of the capacity of
the two institutions to control credit and related
[[Page 57948]]
services in their market. Accordingly, NCUA proposes to exempt
interlocking service involving two unaffiliated depository
organizations that together control no more than 20% of the shares and
deposits in any RMSA or community, as appropriate. Organizations
claiming the exemption would be required to determine the market share
in each RMSA and community in which both depository organizations (or
affiliates) are located.
Determination of the relevant market in which to apply the 20%
market share standards would be made in accordance with the rules for
determining the relevant market under other provisions of NCUA's
interlocks regulations. The rules are structured to apply the community
prohibition to interlocks between organizations operating within a
community and to apply the RMSA prohibition to interlocks between
organizations operating within a RMSA. The small market share exemption
would not be available for interlocks subject to the major assets
prohibition.
The exemptions would continue to apply as long as the organizations
meet the applicable conditions. Any event that causes the level of
deposits controlled to exceed 20% of deposits in any RMSA or community,
such as expansion or a merger, would be considered to be a change in
circumstances. Accordingly, the depository organizations would have 15
months, under NCUA's regulation, to address the prohibited interlock by
termination or otherwise. The Agency with jurisdiction over the
organization may establish a shorter period. Conforming changes
relating to termination have been made to NCUA's change of
circumstances provisions.
NCUA believes that the small market share exemption may be
considered pro-competitive. The exemption is intended to enlarge the
pool of management talent upon which depository institutions may draw,
resulting in more competitive, better-managed institutions without
causing significant anticompetitive effects.
No prior NCUA approval would be required in order to claim the
proposed small market share exemption. Management is responsible for
compliance with the terms of the exemption and for maintaining
sufficient supporting documentation. To determine their eligibility for
the exemptions, depository organizations would need to obtain
appropriate share and deposit data from NCUA and appropriate deposit
data from the FDIC. This information is available upon request to the
agencies or on the Internet at http://www.ncua.gov or http://
www.fdic.gov.
In order to understand the following discussion, it is important to
understand that credit unions offer both share accounts and deposit
accounts. Federal credit unions may only establish and maintain share
accounts for members, except for public unit accounts and certain
nonmember deposits at low-income designated credit unions. Some state-
chartered credit unions may establish and maintain both share accounts
and deposit accounts. Differences between share and deposit accounts
are discussed in NCUA's Truth in Savings rules, 12 CFR part 707, app.
C, comments 707.2(i)1-5 and 707.2(p)1-3. These differences are
important in obtaining pertinent information to document the small
market share exemption.
As NCUA does not report total credit union shares or deposits held
in federally insured credit unions by RMSA or community, affected
depository institutions must create their own custom reports from
information on the NCUA Website. Credit union share and deposit
information is available under the heading ``Credit Union Data'' on
NCUA's first Website page. Entry into the ``Credit Union Data'' icon
will lead the user into the ``Custom Reports'' icon. Entry into the
``Custom Reports'' icon will allow the user to collect total share
information by city or state by adding the ``total shares-total'' and
``total shares and deposits-total'' of all credit unions listed at that
locale. ``Total shares-total'' will capture the share accounts of
federal credit unions and federally insured, state-chartered credit
unions only accepting share accounts. ``Total shares and deposits-
total'' will capture the share and deposit accounts of federally
insured, state-chartered credit unions accepting both share accounts
and deposit accounts. Since NCUA does not provide share and deposit
totals by community, RMSA, or branch, each credit union will need to
provide a reasonable, good faith estimate as to total credit union
shares and deposits in a community, RMSA, or branch. The credit union
totals will need to be added to information about bank and thrift
deposits obtained from the FDIC, and the percentages calculated and
maintained in the credit union's records to act as proof documenting
the use of the small market share exemption.
The most recently available share and deposit data will be used to
determine whether organizations are entitled to the exemptions. All
credit unions file call report information semi-annually. Credit unions
over $50 million in assets report and file call report information
quarterly. FDIC publishes its deposit total information annually. A
credit union seeking the exception is entitled to rely upon the share
and deposit data that has been compiled for the previous year, until
more recent data has been distributed.
NCUA requests comments on all aspects of the proposed small market
share exemption. In particular, NCUA requests comments regarding the
following issues:
1. Whether 20 % of the deposits in a community or RMSA is an
appropriate limit for the application of the exemptions.
2. Whether deposit data collected by the FDIC in connection with
the Report of Condition and Income and NCUA in connection with the
Financial and Statistical Report, NCUA 5300, for federal credit unions,
and the Call Report, NCUA 5300S, for federally insured, state chartered
credit unions should be used to determine eligibility for the
exemptions, and whether alternative sources of information concerning
deposit share should be acceptable for determining availability of the
exemptions.
3. Whether calculation of a depository organization's eligibility
for exemption from the community prohibition will create undue burdens,
and, if so, how the burdens could be reduced (for example, by basing
the exemption on the total asset size of the institutions involved).
4. Whether there is a significant risk that depository
organizations would create ``hub and spoke'' interlocks to evade the
Interlocks Act, whereby several directors of one depository
organization serve as directors of different unaffiliated depository
organizations.
Paperwork Reduction Act
NCUA invites comment on:
(1) Whether the proposed collection of information contained in
this notice of proposed rulemaking is necessary for the proper
performance of NCUA's functions, including whether the information has
practical utility;
(2) The accuracy of NCUA's estimate of the burden of the proposed
information collection;
(3) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(4) Ways to minimize the burden of the information collection on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
[[Page 57949]]
(5) Estimates of capital or start-up costs and costs of operation,
minutes, and purchase of services to provide information.
The collection of information requirements contained in this notice
of proposed rulemaking have been submitted to the Office of Management
and Budget for review in accordance with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)). Organizations and individuals desiring to
submit comments on the information collection requirements should
direct them to the Office of Information and Regulatory Affairs, OMB,
Room 10235, New Executive Office Building, Washington, DC 20503;
Attention: Alex Hunt, Desk Officer for NCUA. Comments must also be sent
to NCUA, 1775 Duke Street, Alexandria, VA 22314-3428; Attention: James
L. Baylen, Paperwork Reduction Act Coordinator, Telephone No. (703)
518-6410; Fax No. (703) 518-6433; E-Mail Address: [email protected] All
comments submitted in response to these proposed regulations will be
available for public inspection, during and after the comment period,
at NCUA's Central Office, 6th Floor, Law Library, 1775 Duke Street,
Alexandria, VA between the hours of 9 a.m. and 1 p.m., Monday through
Friday of each week except federal holidays, and by appointment through
the Law Librarian at (703) 518-6540.
The collection of information requirements in this proposed rule
are found in 12 CFR 711.4(h)(1)(i), 711.5(a)(1), 711.5(a)(2), 711.5(b),
711.6(a), and 711.6(c). This information is required to evidence
compliance with the requirements of the Interlocks Act by federal
credit unions and federally insured, state-chartered credit unions. The
likely respondents are federal credit unions and federally insured,
state-chartered credit unions.
In the past several years, NCUA has received approximately one
management interlock application each year. The following estimates are
provided:
Estimated average annual burden hours per respondent: 3 hours.
Estimated number of respondents: 1.
Start-up costs to respondents: None.
NCUA may not conduct or sponsor, and an organization is not
required to respond to, these information collections unless they
display currently valid OMB control numbers.
No issues of confidentiality under the provisions of the Freedom of
Information Act normally arise for the applications.
Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act (RFA)
(5 U.S.C. 605(b)), NCUA hereby certifies that this proposed rule will
not have a significant economic impact on a substantial number of small
entities. NCUA expects that this proposal will not: (1) have
significant secondary or incidental effects on a substantial number of
small entities; or (2) create any additional burden on small entities.
These conclusions are based on the fact that the proposed regulations
relax the criteria for obtaining an exemption from the interlocks
prohibitions, and specifically address the needs of small entities by
creating the small market share exemption. Accordingly, a regulatory
flexibility analysis is not required.
Executive Order 12866
The NCUA Board has determined that this proposal is not a
significant regulatory action under Executive Order 12866.
Executive Order 12612
Executive Order 12612 requires NCUA to consider the effect of its
actions on state interests. The proposed rule would, as does the
current rule, apply to all federally insured credit unions, including
federally insured state-chartered credit unions. However, since the
proposed rule reduces regulatory burdens, NCUA has determined that the
proposed rule does not constitute a ``significant regulatory action''
for purposes of the Executive Order. NCUA welcomes comment on means and
methods to coordinate with the state credit union supervisors regarding
achievement of shared goals involving viability, flexibility, parity,
conformity, and safety and soundness regarding management interlocks.
List of Subjects in 12 CFR Part 711
Antitrust, Credit unions, Holding companies, Management official
interlocks.
By the National Credit Union Administration Board on October 22,
1998.
Becky Baker,
Secretary of the Board.
For the reasons set out in the preamble, the NCUA proposes to amend
part 711 of chapter VII of title 12 of the Code of Federal Regulations
to read as follows:
PART 711--MANAGEMENT OFFICIAL INTERLOCKS
1. The authority citation for part 711 continues to read as
follows:
Authority: 12 U.S.C. 3201-3208.
Sec. 711.2 [Amended]
1. Section 711.2 is amended by removing paragraphs (b) and (f) and
redesignating paragraphs (c) through (s) as paragraphs (b) through (q),
respectively.
2. Section 711.3 is amended by revising paragraph (c) to read as
follows:
Sec. 711.3 Prohibitions.
* * * * *
(c) Major assets. A management official of a depository
organization with total assets exceeding $2.5 billion (or any affiliate
thereof) may not serve at the same time as a management official of an
unaffiliated depository organization with total assets exceeding $1.5
billion (or any affiliate thereof), regardless of the location of the
two depository organizations. The NCUA will adjust these thresholds, as
necessary, based on year-to-year change in the average of the Consumer
Price Index for the Urban Wage Earners and Clerical Workers, not
seasonally adjusted, with rounding to the nearest $100 million. The
NCUA will announce the revised thresholds by publishing a notice in the
Federal Register.
3. Section 711.5 is revised to read as follows:
Sec. 711.5 Small market share exemption.
(a) Exemption. A management interlock that is prohibited by
Sec. 711.3(a) or Sec. 711.3(b) is permissible, provided:
(1) The interlock is not prohibited by Sec. 711.3(c); and
(2) The depository organizations (and their depository institution
affiliates) hold, in the aggregate, no more than 20% of the deposits,
in each RMSA or community in which the depository organizations (or
their depository institution affiliates) are located. The amount of
shares or deposits will be determined by reference to the most recent
annual Summary of Deposits published by the FDIC or in information
provided by NCUA for the RMSA or community. This information is
available on the Internet at http://www.ncua.gov or http://
www.fdic.gov.
(b) Confirmation and records. Each depository organization must
maintain records sufficient to support its determination of eligibility
for the exemption under paragraph (a) of this section, and must
reconfirm that determination on an annual basis.
4. Section 711.6 is revised to read as follows:
Sec. 711.6 General exemption.
(a) Exemption. NCUA may, by agency order issued following receipt
of an application, exempt an interlock from
[[Page 57950]]
the prohibitions in Sec. 711.3, if NCUA finds that the interlock would
not result in a monopoly or substantial lessening of competition, and
would not present other safety and soundness concerns.
(b) Presumptions. In reviewing applications for an exemption under
this section, NCUA will apply a rebuttable presumption that an
interlock will not result in a monopoly or substantial lessening of
competition if the depository organization seeking to add a management
official:
(1) Primarily serves, low-and moderate-income areas;
(2) Is controlled or managed by persons who are members of a
minority group or women;
(3) Is a depository institution that has been chartered for less
than two years; or
(4) Is deemed to be in ``troubled condition'' as defined in
Sec. 701.14(b)(3) of this chapter.
(c) Duration. Unless a shorter expiration period is provided in the
NCUA approval, an exemption permitted by paragraph (a) of this section
may continue so long as it would not result in a monopoly or
substantial lessening of competition, or be unsafe or unsound. If the
NCUA grants an interlock exemption in reliance upon a presumption under
paragraph (b) of this section, the interlock may continue for three
years, unless otherwise provided in the approval.
5. Section 711.7 is amended by revising paragraph (a) to read as
follows:
Sec. 711.7 Change in circumstances.
(a) Termination. A management official shall terminate his or her
service if a change in circumstances causes the service to become
prohibited. A change in circumstances may include, but is not limited
to, an increase in asset size of an organization, a change in the
delineation of the RMSA or community, the establishment of an office,
an increase in the aggregate deposits of the depository organization,
or an acquisition, merger, consolidation, or reorganization of the
ownership structure of a depository organization that causes a
previously permissible interlock to become prohibited.
* * * * *
[FR Doc. 98-28879 Filed 10-28-98; 8:45 am]
BILLING CODE 7535-01-U
