[Federal Register Volume 63, Number 214 (Thursday, November 5, 1998)]
[Proposed Rules]
[Pages 59742-59743]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29196]
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Proposed Rules
Federal Register
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This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 63, No. 214 / Thursday, November 5, 1998 /
Proposed Rules
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
Organization and Operations of Federal Credit Unions
AGENCY: National Credit Union Administration (NCUA).
ACTION: Notice of proposed rulemaking.
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SUMMARY: The NCUA Board proposes to amend its regulation dealing with
newly chartered and troubled credit unions that requires prior notice
of the appointment or employment of directors and senior officers. The
proposed amendment clarifies when the notice period commences and when
the new director or senior officer may begin service. This action is in
accordance with section 914 of the Financial Institutions Reform,
Recovery , and Enforcement Act (FIRREA) of 1989.
Additionally, the NCUA Board has adopted a new rating system for
corporate credit unions, the Corporate Risk Information System (CRIS).
The proposed amendment clarifies that the definition of a ``troubled''
corporate credit union will be based on CRIS, or on CAMEL for those
state-chartered corporate credit unions in states that do not adopt
CRIS. Clarification is also added to reflect that corporate credit
unions should submit notices of changes in officials or senior
management to the Director of the Office of Corporate Credit Unions.
DATES: Comments must be received on or before February 3, 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: Margaret E. McPartlin, Trial Attorney,
Litigation Division, Office of General Counsel, at the above address or
telephone: (703) 518-6566 or David A. Shetler, Corporate Program
Specialist, Office of Corporate Credit Unions, at the above address or
telephone: (703) 518-6646.
SUPPLEMENTARY INFORMATION:
Background
NCUA has a policy of periodically reviewing its regulations to
``update, clarify and simplify existing regulations and eliminate
redundant and unnecessary provisions.''
IRPS 87-2, Developing and Reviewing Government Regulations. 52 FR
35231 (September 18, 1987). As part of its regulatory review program,
NCUA reviewed Sec. 701.14 of its regulation, 12 CFR 701.14, to
determine whether the language of the regulation was clear and
effective. Section 701.14 of NCUA's Regulations requires that federally
insured credit unions which have been chartered less than two years or
fall within the regulatory definition of a ``troubled credit union,''
file a notice with NCUA prior to adding or replacing a member of the
board of directors or a committee member, or employing or changing the
responsibilities of an individual to a position as a senior executive
officer. As a result of NCUA review and questions from credit unions,
as well as our regional office staff, the Board proposes this amendment
to clarify the language contained in Sec. 701.14(d)(1).
There has been confusion as to when the Regional Director accepts
the notice of a proposed change in an official or senior officer; how
long the Regional Office has to process the notice; and when the
official or senior officer may commence work. The proposed amendment
clarifies the language in Sec. 701.14(d)(1) to provide that the
Regional Director will determine when the notice is complete. The
proposal would provide the Regional Director with up to ten working
days to make this determination. The Regional Director can ask for
additional information if a notice is incomplete. Once the Regional
Director has a complete notice, the credit union will receive written
notification that the complete notice is ready for processing. The
Regional Director then has up to 30 calendar days to issue a decision
approving or disapproving the proposed official or senior officer. If
after the expiration of the 30 days the Regional Director has not
issued written notification of approval or disapproval, the official or
senior officer is considered approved and service may begin.
The NCUA Board has adopted the new CRIS rating system for corporate
credit unions. The proposed amendment clarifies that a CRIS rating of 4
or 5 will be one of the conditions that defines a ``troubled'' federal
corporate credit union. As is the case for all federally insured state
credit unions in the present rule, the rating assigned by the state
supervisor is utilized in determining the definition of a ``troubled''
federally insured, state-chartered corporate credit union. Language is
added to clarify that a 4 or 5 CAMEL composite rating by the state
supervisor will be a condition that defines a ``troubled'' federally
insured, state-chartered corporate credit union, unless that state has
adopted the CRIS system. If the state has not adopted either system,
NCUA will determine and apply a CRIS rating using the corporate credit
union's core exam workpapers.
The existing language of Sec. 701.14 does not indicate that
corporate credit unions should submit notices of changes in officials
or senior management to the Director of the Office of Corporate Credit
Unions (OCCU). Language has been added to the proposed amendment to
clarify that corporate credit unions will submit notices to the
Director of OCCU and that the Director of OCCU will be the NCUA
official that takes action on such notices.
Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act requires NCUA to prepare an analysis
to describe any significant economic impact any proposed regulation may
have on a substantial number of small entities (primarily those under
$1 million in assets). The NCUA Board has determined and certifies that
the proposed rule, if adopted, will not have a significant economic
impact on a substantial number of small credit unions. Accordingly, the
Board has determined that a Regulatory Flexibility Analysis is not
required.
Paperwork Reduction Act
NCUA has determined that the proposed rule does not increase
paperwork requirements under the
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Paperwork Reduction Act of 1995 and regulations of the Office of
Management and Budget.
Executive Order 12612
Executive Order 12612 requires NCUA to consider the effect of its
actions on state interests. NCUA has determined that the proposed
amendment does not constitute a significant regulatory action for the
purposes of the Executive Order.
List of Subjects in 12 CFR Part 701
Credit unions, Senior executive officials.
By the National Credit Union Administration Board on October 26,
1998.
Becky Baker,
Secretary of the Board.
For the reasons set forth in the preamble, it is proposed that 12
CFR part 701 be amended as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
1. The authority citation for part 701 continues to read as
follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1759, 1761a,
1761b, 1766, 1767, 1782, 1784, 1787, and 1789. Section 701.6 is also
authorized by 31 U.S.C. 3717. Section 701.31 is also authorized by
15 U.S.C. 1601 et seq., 42 U.S.C. 1861 and 42 U.S.C. 3601-3610.
Section 701.35 is also authorized by 42 U.S.C. 4311-4312.
2. Section 701.14 is amended as follows:
a. Revise the introductory text of paragraph (b)(3) and add
paragraph (b)(4).
b. Revise paragraph (c)(2).
c. Amend paragraph (d)(1) by adding two new sentences after the
first sentence and by removing the last three sentences and adding five
sentences.
The revisions and additions to Sec. 701.14 read as follows:
Sec. 701.14 Change in official or senior executive officer in credit
unions that are newly chartered or are in troubled condition.
* * * * *
(b) * * *
(3) Except as provided in paragraph (4) of this section for
corporate credit unions, ``troubled condition'' means any insured
credit union that has one or a combination of the following conditions:
* * * * *
(4) In the case of a corporate credit union, troubled condition
means any insured corporate credit union that has one or a combination
of the following conditions:
(i) Has been assigned:
(A) A 4 or 5 Corporate Risk Information System (CRIS) rating in
either the Financial Risk or Risk Management composites by NCUA for a
federal corporate credit union, or
(B) An equivalent 4 or 5 CAMEL composite rating by the state
supervisor in the case of a federally insured, state-chartered
corporate credit union, or an equivalent 4 or 5 CRIS rating in either
the Financial Risk or Risk Management composites by the state
supervisor in the case of a federally insured, state-chartered
corporate credit union in those states that have adopted the CRIS
system, or
(C) A 4 or 5 CRIS rating in either the Financial Risk or Risk
Management composites by NCUA based on core workpapers received from
the state supervisor in the case of a federally insured, state-
chartered credit union in a state that does not use either the CAMEL or
CRIS systems. In this case, the state supervisor will be notified in
writing by the Director of the Office of Corporate Credit Unions that
the corporate credit union has been designated by NCUA as a troubled
institution;
* * * * *
(c) * * *
(2) The credit union meets the definition of troubled condition as
set forth in paragraph (b) (3) or (4) of this section.
* * * * *
(d) Procedures for notice of proposed change in official or senior
executive officer.--(1) Filing and acceptance. * * * In the case of a
corporate credit union, notice shall be filed with the Director of the
Office of Corporate Credit Unions. Additional references herein to
Regional Director will, for corporate credit unions, mean the Director
of the Office of Corporate Credit Unions. * * * Within ten business
days the Regional Director will review the notice and determine whether
the notice is complete. If the notice is not complete, the Regional
Director can request additional information. The credit union will
receive written notification of the date that the notice is deemed
complete and ready for processing. Within 30 calendar days from the
date a notice is deemed complete, the Regional Director will send a
written notification to the individual and the credit union of
disapproval or approval of the proposed official or employee. If the
Regional Director fails to issue a written notification within 30
calendar days, the individual is considered approved and service may
begin.
* * * * *
[FR Doc. 98-29196 Filed 11-4-98; 8:45 am]
BILLING CODE 7535-01-U
