2013-05557. Agency Information Collection Activities; Submission to OMB for Reinstatement of a Previously Approved Collection; Comment Request

AGENCY:

National Credit Union Administration (NCUA).

ACTION:

Request for comment.

SUMMARY:

The NCUA intends to submit the following information collection to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995 (Public Law 104-13, 44 U.S.C. Chapter 35). This information collection is published to obtain comments from the public.

DATES:

Comments will be accepted until April 10, 2013.

ADDRESSES:

Interested parties are invited to submit written comments to the NCUA Contact and the OMB Reviewer listed below:

NCUA Contact: Tracy Crews, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428, Fax No. 703-837-2861, Email: [e-mail].

OMB Contact: Office of Management and Budget, ATTN: Desk Officer for the National Credit Union Administration, Office of Information and Regulatory Affairs, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT:

Requests for additional information, a copy of the information collection request, or a copy of submitted comments should be directed to Tracy Crews at the National Credit Union Administration, 1775 Duke Street, Alexandria, VA 22314-3428, or at [phone].

SUPPLEMENTARY INFORMATION:

I. Abstract and Request for Comments

NCUA is reinstating a previously approved collection for 3133-0133. This collection is in connection with NCUA's investment regulation found at 12 CFR part 703. A previous 60-day notice on this information collection requirement was published in the Federal Register inviting public comment on October 14, 2011 (76 FR 63955). No comments on the previous notice were received. Since the issuance of the last notice, however, the number of potential respondents has decreased and the number of burden hours per respondent has slightly increased.

Federal credit unions are required under Part 703 to establish written investment policies and review them annually, document details of the individual investments monthly, ensure adequate broker/dealer selection criteria, and record credit decisions regarding deposits in financial institutions. There are approximately 4,534 federal credit unions that may be subject to all, or parts of the paperwork burden contained in Part 703.

Generally, there is a disparity in the burden of Part 703 for credit unions of different sizes due to their different investment needs. Very small credit unions generally have simple investment portfolios for which parts of the rule do not apply. Larger credit unions with complex investment portfolios need to address many areas of the rule.

Depending on these and other factors, the categories of burden for federal credit unions complying with Part 703 may include the following:

a. Establishing a written investment policy;

b. Performing an annual review of the written investment policy;

c. Obtaining and reviewing reports from outside investment advisors;

d. Preparing a written report of investments;

e. Obtaining price quotes on securities prior to purchase or sale;

f. Completing and documenting a monthly review of the fair value of each security;

g. Completing a credit analysis of the issuing entity;

h. Obtaining individual confirmation statements for each investment purchased or sold;

i. Obtaining and reconciling a monthly statement of investments held in safekeeping;

j. Preparing a monthly written report of the fair value and/or total return of all trading securities and purchase and sale transactions and the resulting gain or loss on an individual basis;

k. Obtaining and annually analyzing background information on broker/dealers used;

l. Requesting participation in the investment pilot program; and

m. Obtaining written custodial agreement for safekeeping activities by third parties.

The NCUA requests that you send your comments on this collection for Part 703 to the locations listed in the addresses section. Your comments should address: (a) The necessity of the information collection for the proper performance of NCUA, including whether the information will have practical utility; (b) the accuracy of our estimate of the burden (hours and cost) of the collection of information, including the validity of the methodology and assumptions used; (c) ways we could enhance the quality, utility, and clarity of the information to be collected; and (d) ways we could minimize the burden of the collection of the information on the respondents such as through the use of automated collection techniques or other forms of information technology. It is NCUA's policy to make all comments available to the public for review.

II. Data

Proposal for the following collection of information:

OMB Number: 3133-0133.

Form Number: None.

Type of Review: Reinstatement of previously approved collection.

Title: 12 CFR Part 703, Investment and Deposit Activities.

Description: To ensure that federal credit unions make safe and sound investments, the rule requires that they establish written investment policies and review them annually, document details of the individual investments monthly, ensure adequate broker/dealer selection criteria, and record credit decisions regarding deposits in certain financial institutions.

Respondents: Federal Credit Unions (here abbreviated as FCUs).

Estimated Number of Respondents/Recordkeepers: 4,534.

Estimated Burden Hours per Response: Approximately 50 hours.

Frequency of Response: Recordkeeping; Reporting; On Occasion; Quarterly.

Estimated Total Annual Burden Hours: 225,683 hours, determined as follows:

a. Establish a written investment policy.

Establishing a written investment policy by a financial institution is a usual and customary business practice, therefore, no new or additional burden is added with this requirement.

b. Perform an annual review of the written investment policy.

Number of respondents—4,534

Frequency of Response—annually (1 time per year)

Annual Hour Burden—2.5 hours (estimated between 15 minutes and 4 hours for this review)

(4,534 × 1) × 2.5 = 11,335 hours

c. Obtain and review reports from outside investment advisors.

Number of respondents—720

Frequency of Response—monthly (12 times per year)

Annual Hour Burden—2 hours

(720 × 12) × 2= 17,280 hours

d. Prepare a written report of investments.

Number of respondents—4,534

Frequency of Response—monthly (12 times per year)

Annual Hour Burden—2 hours (estimated between 1 and 3 hours)

(4,534 × 12) × 2 = 108,816 hours

e. Obtain price quotes on securities prior to purchase or sale.

Number of respondents—2,742 (not all FCUs invest in securities)

Frequency of Response—20 (an average of 20 purchases or sales per year)

Annual Hour Burden—12 minutes each (or 0.2 of an hour)

(2,742 × 20) × .2 = 10,968 hours

f. Complete and document a monthly review of the fair value of each security.

Number of respondents—2,742

Frequency of Response—monthly (12 times per year)

Annual Hour Burden—1.5 hours (estimated between 10 minutes and 2 hours)

(2,742 × 12) × 1.5 = 49,356 hours

g. Complete a credit analysis of the issuing entity.

Number of respondents—618

Frequency of Response—annually (1 time per year) times 3 per FCU

Annual Hour Burden—10 hours

((618 × 1) × 3) × 10 = 18,540 hours

h. Obtain individual confirmation statements for each investment purchased or sold.

Obtaining individual confirmation statements for each investment purchased or sold by a financial institution is a usual and customary business practice of FCUs and broker/dealers; therefore, no new or additional burden is added with this requirement.

i. Obtain and reconcile a monthly statement of investments held in safekeeping.

Obtaining and reconciling a monthly statement of investments held in safekeeping by a financial institution is a usual and customary business practice, therefore, no new or additional burden is added with this requirement.

j. Prepare a monthly written report of the fair value and/or total return of all trading securities and purchase and sale transactions and the resulting gain or loss on an individual basis.

Number of respondents—74

Frequency of Response—monthly (12 times per year)

Annual Hour Burden—1 hour

(74 × 12) × 1 = 888 hours

k. Obtain and annually analyze background information on broker/dealers used.

Number of respondents—3,500

Frequency of Response—annually (1 time per year)

Annual Hour Burden—2 hours

(3,500 × 1) × 2 = 7,000 hours

l. Request participation in the investment pilot program.

Number of respondents—1

Frequency of Response—1 (on occasion)

Annual Hour Burden—100 hours

(1 × 1) × 100 = 100 hours

m. Obtain written custodial agreement for safekeeping activities by third parties.

Number of respondents—3,500

Frequency of Response—1 time per year

Annual Hour Burden—15 minutes

(3,500 × 1) × .4 = 1,400 hours

Therefore, the estimated total burden is 225,683 hours.

Estimated Total Annual Cost: The cost is measured in hours.

By the National Credit Union Administration Board on March 5, 2013.

Mary Rupp,

Secretary of the Board.