[Federal Register Volume 61, Number 135 (Friday, July 12, 1996)]
[Proposed Rules]
[Pages 36663-36664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17783]
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Proposed Rules
Federal Register
________________________________________________________________________
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. 61, No. 135 / Friday, July 12, 1996 /
Proposed Rules
[[Page 36663]]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 745
Share Insurance and Appendix
AGENCY: National Credit Union Administration (NCUA).
ACTION: Notice of proposed rulemaking.
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SUMMARY: The proposed rule will amend regulations on the payment of
share insurance and appeals to provide authority for the liquidating
agent to pay dividends earned or accrued, but not posted to share
accounts. Also, the proposed rule will amend those regulations to
reference other regulations on the construction of time limits when
computing time.
DATES: Comments must be postmarked or posted on the NCUA electronic
bulletin board by September 10, 1996.
ADDRESSES: Send comments to Becky Baker, Secretary of the Board,
National Credit Union Administration Board, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
FOR FURTHER INFORMATION CONTACT:
Jerry L. Courson, Special Assistant to the President, National Credit
Union Administration, Asset Liquidation Management Center, 4807
Spicewood Springs Road, Suite 5100, Austin, Texas 78759 or telephone
(512) 795-0999 or Allan H. Meltzer, Associate General Counsel, National
Credit Union Administration, Office of General Counsel, 1775 Duke
Street, Alexandria, Virginia 22314-3428 or telephone (703) 518-6540.
SUPPLEMENTARY INFORMATION:
Request for Comments
The NCUA Board seeks comments on the proposed changes to Part 745
of the NCUA Rules and Regulations.
Background
Subpart B of Part 745 of the NCUA Rules and Regulations deals with
the payment of share insurance and appeals. Specifically, Section
745.200(b) provides that in determining the amount of share insurance,
no dividends shall be paid on shares if sufficient undivided and
current earnings are not available for such purpose. However, dividends
accrued and posted to share accounts for prior accounting periods are
considered as principal (regardless of earnings).
In a small number of liquidations, it has been necessary to
reconstruct and correct the credit union records. In these liquidation
cases, the reconstruction process disclosed situations where dividends
were posted to some member accounts and not posted to other member
accounts. Under the current regulation, to properly reconstruct these
accounts and the dividends that were miscalculated or omitted, the
liquidating agent obtained authority from the NCUA Board.
Since the current rule was adopted in 1990, only a small number of
the 352 credit unions placed into involuntary liquidation have involved
dividend issues. In most cases, the records are updated and dividends
are posted before liquidation. Based on the current volume, if all
cases involving unposted dividends were referred to the NCUA Board, the
workload would be excessive. However, the workload of the liquidating
agent would increase, because it would be necessary to audit or review
each member account twice, and the additional workload would result in
a delay in actual payment to the members.
The liquidation process would be more efficient if a rule is
adopted that permits recording unposted dividends. This option also
provides for a more equitable treatment of all members. The proposed
rule provides discretion for the liquidating agent to correct share
accounts by recording dividend payments that were not posted or were
incorrectly posted by credit union personnel due to fraud,
embezzlement, or accounting errors. Under the proposed rule, dividends
not earned in the normal course of business, would not be included in
the determination of insured shares. In addition, the proposed rule
provides flexibility in dealing with sufficient earnings. Under the
current regulation, dividend payments cannot be considered as principal
for insurance purposes if sufficient earnings were not available. The
proposed rule is silent on sufficient earnings, but a credit union's
earnings could be a factor used by the liquidating agent in determining
insured shares.
Under the proposed rule, decisions on unposted dividends can be
made without specific NCUA Board action.
In addition to amending the rule to deal with unposted dividends,
the proposed rule making also amends Section 745.200(d) to reference
Section 747.12(a) of the NCUA Rules and Regulations when computing
time. The current regulation references Section 747.119, and this
section no longer exists.
Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act requires NCUA to prepare an analysis
to describe the significant economic impact any proposed regulation may
have on a substantial number of small credit unions (primarily those
under $1 million in assets). This proposal deals with the payment of
share insurance and does not directly impact operating credit unions.
It does not add any additional requirements or burden. The proposal
could provide an additional level of confidence for the credit union
member. Accordingly, the NCUA Board has determined and certifies under
the authority granted in 5 U.S.C. 605(b) that the proposed rule, if
adopted, will not have a significant economic impact on a substantial
number of small credit unions and that a Regulatory Flexibility Act
analysis is not required.
Paperwork Reduction Act
The proposed rule does not impose any new paperwork requirements.
Executive Order 12612
The proposed changes to Section 745.200 will apply to both federal
credit unions and federally-insured, state chartered credit unions. The
NCUA Board, pursuant to Executive Order 12612, has determined that the
proposed amendment will not have 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. Further, the proposed rule will not
preempt provisions of state law or regulation.
[[Page 36664]]
List of Subjects in 12 CFR Part 745
Administrative practice and procedure, Bank deposit insurance,
Claims, Credit unions.
By the National Credit Union Administration Board on July 9,
1996.
Becky Baker,
Secretary of the Board.
Accordingly, NCUA proposes to amend its regulation as follows:
PART 745--SHARE INSURANCE AND APPENDIX
1. The authority citation for part 745 continues to read as
follows:
Authority: 12 U.S.C. 1766, 1781, 1789.
2. Section 745.200 is amended by revising paragraphs (b) and (d) to
read as follows:
Sec. 745.200 General.
* * * * *
(b) Amount of insurance. The amount of insurance on an insured
account shall be determined in accordance with the provisions of
subpart A of this part and the Federal Credit Union Act. For the
purpose of determining insurance coverage, dividends earned in the
ordinary course of business and posted to share accounts for any prior
accounting or dividend period shall be deemed to be principal under
this rule. Dividends earned or accrued in the ordinary course of
business, but not posted to share accounts, may be paid at the
discretion of the liquidating agent. In making such determination, the
liquidating agent will take into consideration whether the failure to
post dividends earned or accrued was due to the fraud, embezzlement or
accounting errors of credit union personnel. The liquidating agent may
require an accountholder to submit documentation supporting any claim
for unposted dividends not otherwise evidenced in the credit union
records. However, in no event will dividend amounts be considered as
principal for insurance purposes pursuant to this section if not
consistent with the amounts paid on similar classes of shares.
* * * * *
(d) Computing time. In computing any period of time prescribed by
this subpart, the provisions of Sec. 747.12(a) shall apply.
[FR Doc. 96-17783 Filed 7-11-96; 8:45 am]
BILLING CODE 7535-01-M
