94-18718. Truth in Savings  

  • [Federal Register Volume 59, Number 148 (Wednesday, August 3, 1994)]
    [Unknown Section]
    [Page 0]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 94-18718]
    
    
    [[Page Unknown]]
    
    [Federal Register: August 3, 1994]
    
    
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    NATIONAL CREDIT UNION ADMINISTRATION
    12 CFR Part 707
    
     
    
    Truth in Savings
    
    AGENCY: National Credit Union Administration.
    
    ACTION: Final rule; extension of compliance date.
    
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    SUMMARY: The NCUA Board is publishing a change to the compliance date 
    to part 707 of the NCUA Rules and Regulations (Truth in Savings). This 
    document extends the compliance date for nonautomated credit unions 
    that have assets of $2 million or less as of December 31, 1993. The 
    extension gives the smaller, nonautomated credit unions more time to 
    come into compliance with part 707.
    
    DATES: Effective Date: This document is effective January 1, 1995.
        Compliance Date: The compliance date of part 707 is extended to 
    January 1, 1996, for credit unions of an asset size of $2 million or 
    less as of December 31, 1993, that are not automated.
    
    FOR FURTHER INFORMATION CONTACT:Richard Schulman, Associate General 
    Counsel, or Martin Conrey, Staff Attorney, Office of General Counsel, 
    telephone (703) 518-6540.
    
    SUPPLEMENTARY INFORMATION:
    
    (1) Background.
    
    Prior Extensions
    
        NCUA previously extended the compliance date for part 707, Truth in 
    Savings, for certain small, nonautomated credit unions. (Final rule, 59 
    FR 13435, March 22, 1994). At that time, the compliance date of part 
    707 was extended to March 31, 1995, for credit unions of an asset size 
    between $500,000 and $1 million as of December 31, 1993, that are not 
    automated. Similarly, the compliance date of part 707 was extended to 
    June 30, 1995, for credit unions of an asset size of less than $500,000 
    as of December 31, 1993, that are not automated. The compliance date 
    remained January 1, 1995, for all other credit unions.
    
    Importance of Small Credit Unions
    
        The NCUA Board is very concerned with the continued viability of 
    small credit unions. As Norman E. D'Amours, NCUA Chairman, explained 
    recently:
    
        Small credit unions are very important to the continuing growth 
    of the movement. Like the tender shoots on a large tree, they 
    represent the promise of continuing life and health. They serve 
    people who badly need their services, and they know their members 
    very well. Such a credit union is more likely to take a risk on the 
    reputation and character of a member unable to find credit 
    elsewhere.
    
    NCUA Letter to Credit Unions No. 153 (April 1994)
    
        Ten years ago, credit unions under $2 million in size made up about 
    two-thirds (10,564) of all federally insured credit unions. Today, such 
    credit unions number only 4,132, about one-third of federally insured 
    credit unions. In addition, the assets of today's 4,132 smallest credit 
    unions are 1.2 percent of total assets in all credit unions, while 
    credit unions of $2 million or less accounted for 7.7 percent of total 
    assets ten years ago. The average credit union today has $22.5 million 
    in assets, compared to $5 million ten years ago.
        However, over two-thirds of these small credit unions are already 
    automated or have data processing capabilities. Since these credit 
    unions are in a position to begin Truth in Savings compliance on 
    January 1, 1995, the Board believes that to grant these credit unions a 
    further compliance extension would be contrary to the intent of 
    Congress in enacting TISA, and contrary to the interests of their 
    credit union members.
        Small credit unions that are not automated present a different 
    picture entirely. Because of the many dividend rate, annual percentage 
    yield, and annual percentage yield earned calculations required by 
    TISA, and the prohibition of the prevalent rollback method of 
    calculating dividends, nonautomated credit unions are much more needful 
    of adequate resources and time to accomplish meaningful Truth in 
    Savings compliance. To this end, the NCUA Board adopted a program to 
    place retired NCUA computers with nonautomated credit unions with $2 
    million or less in assets. Due to the length of the federal procurement 
    process for obtaining new NCUA computers, however, no computers will be 
    available to distribute until sometime in 1995. The Board understands 
    that many nonautomated credit unions with assets of $2 million or less 
    have relied upon previous estimates of earlier delivery dates of 
    retired NCUA computers. Therefore, the Board has decided to expand the 
    extension for all credit unions eligible for retired NCUA computers 
    until January 1, 1996.
        Only a small number of credit unions are affected by this 
    extension. NCUA has determined that there are 1,248 credit unions under 
    $2 million in assets that have no or grossly inadequate computers or 
    data processing capability. Of these credit unions, approximately 1,096 
    have less than $1 million in assets and approximately 152 have between 
    $1-2 million in assets.
        The compliance date remains January 1, 1995, for all other credit 
    unions (automated credit unions under $2 million in assets and all 
    credit unions having over $2 million or more in assets). NCUA 
    encourages early Truth in Savings compliance by all credit unions as 
    soon as they are able in order to meet the Congressional intent of 
    universal Truth in Savings coverage of consumer held accounts in 
    financial institutions. Each credit union receiving this extension is 
    encouraged to begin to comply with TISA and part 707 as soon as its 
    board of directors believes the credit union is ready.
        The NCUA Board is well aware that most credit unions start small, 
    and historically, the fostering of small credit unions has strengthened 
    the entire credit union movement. The Board has supported and 
    instituted several small credit union initiatives to continue the 
    development of small credit unions. For instance, in NCUA's Region V, a 
    ``big brother'' partnership program has teamed smaller credit unions 
    with larger credit unions, proving that the smallest credit unions can 
    be preserved if examiners, other credit unions, and trade associations 
    work together cooperatively in the spirit of the credit union movement 
    to help those in need. Over 331 small credit unions are benefiting from 
    participation in various Region V small credit union programs. NCUA has 
    implemented the ``big brother'' program in all other NCUA Regions.
        The NCUA Board recently established an Office of Community 
    Development Credit Unions to help implement NCUA's commitment to small, 
    low-income, and community credit unions. In addition, the Board 
    recently adopted new chartering and field of membership policies 
    designed to encourage the creation of new credit unions, and facilitate 
    credit union services in financially depressed communities (Final 
    Interpretive Ruling and Policy Statement No. 94-1, 59 FR 29066, June 3, 
    1994). Moreover, the agency has liberalized its rules governing receipt 
    of nonmember deposits by low-income credit unions (Final Rule, 59 FR 
    26101, May 19, 1994), and has previously extended the Truth in Savings 
    compliance deadline for small credit unions (Final Rule, 59 FR 13435, 
    March 22, 1994). A commitment has been made by the Board to provide 
    some nonautomated, small credit unions access to laptop computers used 
    by credit union examiners as this equipment is replaced with newer 
    technology. Credit unions that are not automated and under $2 million 
    in assets, and that have not already done so, should contact either 
    their appropriate state credit union supervisor or NCUA Regional 
    Director no later than October 1, 1994, if interested in participating 
    in the laptop computer program.
        By these, and other, initiatives and programs, the Board seeks to 
    assure all credit unions that the NCUA Board values small credit unions 
    and will work to preserve them. Larger credit unions and the trade 
    groups are urged to assist their colleagues in the smallest credit 
    unions. The Board believes that such selfless giving lies at the heart 
    of the cooperative philosophy and history of the credit union movement. 
    Healthy, small credit unions are an absolutely essential part of a 
    bright future for all credit unions. With this background, when the 
    Board discovered that the extensions previously granted to small, 
    nonautomated credit unions would not be sufficient to accomplish all of 
    the Board's objectives, the Board decided to grant an additional 
    extension.
        It has been shown to the satisfaction of the NCUA Board that small, 
    nonautomated credit unions need more time to comply with the complex, 
    technical requirements of Truth in Savings than other, larger, more 
    automated credit unions. An extended compliance date for affected 
    credit unions will enable NCUA and other interested parties to complete 
    the extensive training and preparation that is necessary to ensure that 
    these credit unions comply with part 707 by the extended compliance 
    dates. This action is taken to preserve, educate, and possibly automate 
    (by providing retired NCUA computers and by fostering the provision of 
    minimal cost computer hardware, software and services by other parties) 
    many of these small credit unions; ensure compliance with Truth in 
    Savings at the earliest possible date; assist administrative 
    convenience; reduce the risk of potential losses to the National Credit 
    Union Share Insurance Fund; and to allow time for coordination of this 
    effort among NCUA, affected credit unions, data processors and other 
    interested parties.
        As stated previously, NCUA intends to use the December 31, 1993, 
    NCUA Form 5300 report to determine the requisite nonautomation status 
    and asset size for those credit unions filing Form 5300 reports that 
    are eligible for the extensions in required compliance. Credit unions 
    which do not file Form 5300 reports will be permitted to prove 
    nonautomation status and asset size by other means. NCUA will consider 
    verified self-certifications, certifications by appropriate state 
    supervisory authorities, and other equivalent forms of proof as 
    sufficient for eligibility for the extension by non-federally insured 
    credit unions. Indeed, with the assistance of the affected credit 
    unions, trade groups, and the NCUA regional and central office staffs, 
    NCUA is well on its way to having identified credit unions in need of 
    Truth in Savings compliance assistance, and in providing various 
    educational and other assistance to the affected small, nonautomated 
    credit unions.
    
    Administrative Procedure Act
    
        The extension made to this part is not subject to the notice and 
    comment provisions of the Administrative Procedure Act (the ``APA''), 5 
    U.S.C. 551 et seq. The extension relates to a few credit unions that 
    need more time and assistance in complying with part 707. No major 
    changes are contemplated, or made, by this extension. Therefore, the 
    NCUA Board has determined that, in this case, the APA notice and 
    comment procedures for this extension is impracticable, unnecessary, 
    and contrary to the public interest. 5 U.S.C. 553(b)(3)(B).
    
        By the National Credit Union Administration Board on July 26, 
    1994.
    Becky Baker,
    Secretary of the Board.
    [FR Doc. 94-18718 Filed 8-2-94; 8:45 am]
    BILLING CODE 7535-01-P
    
    
    

Document Information

Effective Date:
1/1/1995
Published:
08/03/1994
Department:
National Credit Union Administration
Entry Type:
Uncategorized Document
Action:
Final rule; extension of compliance date.
Document Number:
94-18718
Dates:
Effective Date: This document is effective January 1, 1995.
Pages:
0-0 (1 pages)
Docket Numbers:
Federal Register: August 3, 1994
CFR: (1)
12 CFR 707