[Federal Register Volume 62, Number 186 (Thursday, September 25, 1997)]
[Rules and Regulations]
[Pages 50245-50247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25261]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Chapter VII
Interpretive Rulings and Policy Statements
AGENCY: National Credit Union Administration (NCUA).
ACTION: Withdrawal of outdated and unnecessary Interpretive Rulings and
Policy Statements (IRPS).
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SUMMARY: NCUA is withdrawing several of its Interpretative Rulings and
Policy Statements (IRPS) that have become outdated or unnecessary or
have been superseded by other IRPS or NCUA regulations. This is the
first step in NCUA's ongoing project to update and streamline its IRPS.
The intended purpose of withdrawing these IRPS is to ease the
compliance burden on federally chartered and federally insured credit
unions and provide more valuable guidance by eliminating IRPS that no
longer effectively advance NCUA's regulatory goals or statutory
responsibilities.
EFFECTIVE DATE: September 25, 1997.
ADDRESSES: National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
FOR FURTHER INFORMATION CONTACT: Nicole Sippial Williams, Staff
Attorney, Division of Operations, Office of the General Counsel, (703)
518-6540, or at the above address.
SUPPLEMENTARY INFORMATION:
A. Background
As part of its Regulatory Review Program, NCUA conducted a review
of its IRPS to determine their current effectiveness. Several of the
IRPS were found to be outdated and unnecessary and, thus, could be
withdrawn. On March 13, 1997, the NCUA Board issued an advance notice
of proposed rulemaking soliciting comments on a proposal to revise
NCUA's existing IRPS. As part of the proposal, NCUA recommended
withdrawing 17 IRPS, redesignating 9 IRPS into the NCUA Rules and
Regulations, transferring 1 IRPS into a NCUA instructional manual or
directive, and preserving 12 IRPS.
NCUA received a total of 17 comments from federal credit unions,
state-chartered credit unions, trade organizations, state leagues, and
state credit union regulators. The commenters were overwhelmingly in
support of NCUA's efforts to revise and streamline its IRPS and the
proposed action to be taken with regard to each IRPS, but suggested a
few specific changes.
One commenter suggested that IRPS 80-10, When Federal Credit Unions
Can Charge More Than 15% Per Annum on Government Insured or Guaranteed
Loans, should not be withdrawn. We disagree. The guidance provided in
this IRPS is adequately addressed in Section 701.21(e) of NCUA Rules
and Regulations. One commenter suggested that IRPS 82-6, Corporate
Federal Credit Union Chartering Guidelines, should not be withdrawn,
but should remain for credit unions that believe they would be better
served by a new corporate credit union or for state chartered credit
unions that want to convert to federal charters. We disagree. The
guidance provided in IRPS 82-6 is no longer relevant to chartering
corporate credit unions. Applications for new corporate charters will
be handled on a case-by-case basis with the NCUA Chartering and Field
of Membership Manual (IRPS 94-1, as amended by IRPS 96-1) used as
guidance where applicable.
NCUA thoroughly evaluated the comments and has incorporated some of
the suggested changes into this
[[Page 50246]]
withdrawal of IRPS and will continue to do so as the IRPS are further
revised.
IRPS that were marked for redesignation into NCUA Rules and
Regulations, according to the March 13, 1997, proposal, will be
redrafted as proposed rules and submitted to the public for notice and
comment at a later date. IRPS to be preserved, will be further reviewed
for possible revision, and if any changes are made, the IRPS will be
reissued.
B. IRPS To Be Withdrawn
At this time NCUA is withdrawing 18 IRPS that it considers either
outdated, since they no longer provide relevant or useful guidance, or
unnecessary, since the guidance provided has already been incorporated
into NCUA regulations or manuals. In addition, 10 IRPS are being
withdrawn because they have been superseded by other IRPS or NCUA
regulations and NCUA wants to reemphasize to the public that these IRPS
are no longer viable.
IRPS No. 79-1, Statement of Policy Regarding Relationship of Credit
Union Service Corporations and Existing Accounting Service Centers, 44
FR 21762, Apr. 12, 1979, provides that in order to assist existing
accounting service centers and ``leeway'' organizations in complying
with a new CUSO rule implemented by NCUA, NCUA agrees to forego taking
any action for a period of one year. IRPS 79-1 is outdated because it
addresses a specific NCUA policy to allow a one-year phase-in period
for a new CUSO rule implemented by NCUA at that time.
IRPS No. 79-2, Share Accounts, 44 FR 39382, July 6, 1979, provides
that as a result of a rule change deregulating share accounts, NCUA no
longer requires share draft accounts to be identical to regular share
accounts and confirms that share draft accounts are regular share
accounts with terms and dividend rates that can vary from other regular
share accounts. IRPS 79-2 is unnecessary because the guidance provided
is restated in Section 701.35 of NCUA Rules and Regulations.
IRPS No. 79-3, Amortization of Long Term Real Estate Loans, 44 FR
39182, July 5, 1979, states that absent NCUA approval, federal credit
unions must amortize real estate loans by ``substantially equal monthly
installments'' with two exceptions. The total of principal and interest
for the first and last monthly installment may differ slightly from the
total of the other installments. IRPS 79-3 is outdated because it is
superseded by Sections 5040.5.2.1.1 and 5040.5.2.1.2 of the NCUA
Accounting Manual. The Accounting Manual establishes two methods of
amortizing loans that may be used by federal credit unions.
IRPS No. 79-4, Investment Activities, 44 FR 51195, Aug. 31, 1979,
established certain accounting procedures for permissible investment
activities. IRPS 79-4 is unnecessary because the guidance provided is
restated in the current, as well as, the newly revised version of Part
703 NCUA of Rules and Regulations and in the NCUA Accounting Manual.
IRPS No. 79-5, Insurance Activities, 44 FR 43711, July 26, 1979,
provides that participation in a draft payment system that involves the
presentment and settlement of claims by a federal credit union, with
subsequent reimbursement to the federal credit union by the insurer is
impermissible. Thus, a federal credit union's involvement with an
insurance vendor is limited to the forwarding of claim forms to the
vendor for processing. IRPS 79-5 is outdated because it interprets an
obsolete provision. In addition Part 721 of NCUA Rules and Regulations,
addressing rules governing insurance, limits a federal credit union's
insurance activities to performing administrative functions on behalf
of a vendor.
IRPS No. 79-7, Liquidity Reserve, 44 FR 61172, Oct. 24, 1979,
provides guidance on NCUA's position on (1) provisions of Part 742, (2)
the calculation and disclosure of liquidity reserves, and (3)
procedures for requesting additional time to meet the liquidity
reserve. IRPS 79-7 is outdated because Part 742 has been removed from
NCUA Rules and Regulations. The NCUA Board believed that efficient
liquidity management varies among credit unions, and liquidity
decisions should be the responsibility of individual credit unions
boards of directors.
IRPS No. 79-8, Public Observance and Availability of Information
Regarding Board Meetings; Interim Sunshine Act Policy Statement, 44 FR
70709, Dec. 10, 1979, sets forth NCUA's policy governing the
implementation of the Sunshine Act. IRPS 79-8 is unnecessary because
the guidance provided is restated in Secs. 791.9-791.18 of NCUA Rules
and Regulations.
IRPS No. 79-9, Rate of Interest, 44 FR 74799, Dec. 18, 1979,
provides that the effect of a compensating balance must be considered
in determining usury limits on federal credit union member loans. IRPS
79-9 is outdated because the permissible interest rate that credit
union may charge has changed from 12% to 15%, and the practice of
requesting compensating balances is no longer prevalent among credit
unions. Any potential questions from a federal credit union, relating
to compensating balances, can be handled without the continuing need
for this IRPS.
IRPS No. 79-10, Notice of Proposed Consumer Program, 45 FR 7738,
Feb. 4, 1980, sets forth NCUA's proposed consumer program as requested
by Executive Order 12160. IRPS 79-10 is outdated because it is
superseded by IRPS 80-7, the Final Notice of Consumer Program, 45 FR
50260, July 28, 1980.
IRPS No. 80-7, Final Notice of Consumer Program, 45 FR 50260, July
28, 1980, sets forth NCUA's final consumer program which was to be
governed by the Office of Consumer Affairs. IRPS 80-7 is outdated
because it is superseded by NCUA Instruction 12400.2, Compliance
Activities: Complaint Handling and Documentation of Violations, which
sets forth NCUA's current policy for handling consumer affairs.
IRPS No. 80-10, When Federal Credit Unions Can Charge More Than 15
Percent Per Annum on Government Insured or Guaranteed Loans, 45 FR
71353, Oct. 28, 1980, provides that government insured and guaranteed
loans may exceed the federal usury rate for federal credit unions. IRPS
80-10 is unnecessary because the guidance provided is restated in
Sec. 701.21(e) of NCUA Rules and Regulations.
IRPS No. 80-11, State Chartered Federally Insured Credit Unions as
Most Favored Lenders, 45 FR 78624, Nov. 26, 1980, sets forth the
conditions upon which federally insured state chartered credit unions
(FISCUs) are granted most favored lender status pursuant to the Federal
Credit Union Act. IRPS 80-11 is outdated because it has been superseded
by IRPS 81-3, State Chartered Federally Insured Credit Unions as ``Most
Favored Lenders,'' 45 FR 78624, Nov. 26, 1980, which removed the
conditions set forth in IRPS 80-11 so that most favored lender status
would apply to any loan that an FISCU grants.
IRPS No. 80-12, Verification of Member Accounts, 46 FR 9919, Jan.
30, 1981, provides that federal credit unions are allowed to use
statistical sampling in satisfaction of statutory and regulatory member
account verification requirements. IRPS 80-12 is unnecessary because
the guidance provided is restated in Chapter 24 of NCUA's Supervisory
Committee Guide.
IRPS No. 81-1, Definitions--Exclusions from Gross Income in
Computing Reserve Requirements, 46 FR 13204, Feb. 20, 1981, provides
that credit unions receiving Central Liquidity Fund dividends may
exclude those dividends in computing federally-imposed reserve
requirements. IRPS 81-
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1 is unnecessary because the guidance provided is restated in Section
6090.5 of the NCUA Accounting Manual.
IRPS No. 81-2, Federal Funds, 46 FR 14887, Mar. 3, 1981, authorizes
certain federal funds transactions for federal credit unions and
establishes guidelines and accounting procedures for the same. IRPS 81-
2 is unnecessary because the guidance provided is restated in
Sec. 703.100(g) of NCUA Rules and Regulations.
IRPS No. 81-4, Developing Government Regulations, 46 FR 29248, June
1, 1981, sets forth NCUA's procedures for developing and reviewing its
regulations. IRPS 81-4 was drafted in response to the passage of the
Financial Simplification Act of 1980, the Regulatory Flexibility Act of
1980, 5 U.S.C. et seq., and the Paperwork Reduction Act of 1980, 44
U.S.C. 3501 et seq. IRPS 81-4 is now outdated due to changes in the
law, including the repeal of the Financial Simplification Act of 1980,
and is superseded by IRPS 87-2 which sets forth NCUA's current
procedures for developing and reviewing its regulations.
IRPS No. 81-5, Proposed Policy Statement Release of Consumer
Examination Reports, 46 FR 29575, June 2, 1981, sets forth conditions
under which individual federal credit unions may release consumer
compliance examination reports to third parties. IRPS 81-5 is outdated
because consumer compliance examinations are no longer performed as
separate examinations, but are performed in conjunction with safety and
soundness examinations producing one examination report. This
examination report is an exempt document. The release of an exempt
document is addressed in Part 792 of NCUA Rules and Regulations.
IRPS No. 81-8, Full and Fair Disclosure Requirements, 47 FR 23685,
June 1, 1982, provides that compliance with Section 2000 of the
Accounting Manual will place a federal credit union in compliance with
the full and fair disclosure requirements of Part 702 of the NCUA
Regulations. IRPS 81-8 is unnecessary because the guidance provided is
restated in Sec. 702.3 of NCUA Rules and Regulations and Section 1000
of the NCUA Accounting Manual.
IRPS No. 81-9, Share, Share Draft and Share Certificate Accounts,
46 FR 57668, Nov. 25, 1981, sets forth NCUA's position regarding the
calculation and assessment of premature withdrawal penalties for
variable-rate and multiple-addition share certificate accounts. IRPS
81-9 is outdated because NCUA deregulated Sec. 701.35 of the NCUA Rules
and Regulations, 47 FR 17979, Apr. 27, 1982, giving a federal credit
union's board of directors the responsibility for determining the terms
and conditions governing share, share draft, and share certificate
accounts, including premature withdrawal penalties.
IRPS No. 82-1, Membership in Federal Credit Unions, 47 FR 16775,
Apr. 20, 1982, provides that federal credit unions may offer membership
to borrowers whose loans have been purchased from a liquidated credit
union and that they may serve multiple occupational group. IRPS 82-1 is
outdated because it is superseded by IRPS 82-3, Membership in Federal
Credit Unions, 47 FR 26808, June 22, 1982.
IRPS No. 82-3, Membership in Federal Credit Unions, 47 FR 26808,
June 22, 1982, provides further guidance on field of membership issues
and authorizes multiple associational group charters. IRPS 82-3 is
outdated because it is superseded by IRPS 89-1, Chartering and Field of
Membership Policy, 54 FR 31165, July 27, 1989.
IRPS No. 83-2, Membership in Federal Credit Unions, 48 FR 22899,
May 23, 1983, clarified that the definition of a ``well-defined area''
stated in IRPS 82-3 includes home offices and branch offices for
purposes of adding additional associational and occupational groups.
IRPS 83-2 is outdated because it is superseded by IRPS 89-1, Chartering
and Field of Membership Policy, 54 FR 31165, July 27, 1989.
IRPS No. 84-1, Membership in Federal Credit Unions, 49 FR 46536,
Nov. 27, 1984, combines IRPS 82-3 and IRPS 83-2, sets out modifications
made since the two IRPS were published, incorporates several unwritten
policies, and sets forth a new policy on service to senior citizens and
retirees. IRPS 84-1 is outdated because it is superseded by IRPS 89-1,
Chartering and Field of Membership Policy, 54 FR 31165, July 27, 1989.
IRPS No. 85-1, Trustees and Custodians of Pension Plans, 50 FR
48176, Nov. 22, 1985, provides guidelines for federal credit unions
involved with self-directed IRA and Keogh accounts. IRPS 85-1 is
unnecessary because the guidance provided is restated in Part 724 of
NCUA Rules and Regulations.
IRPS No. 86-2, Joint Policy Statement on Basic Financial Services,
51 FR 42083, Nov. 21, 1986, provides that NCUA has adopted FFIEC's
recommendation encouraging credit unions to offer basic financial
services accessible to low and moderate-income members. IRPS 86-2 is
unnecessary because it restates the basic mission of credit unions. As
stated in the Federal Credit Unions Act, 12 U.S.C. 1751, the Act was
established ``to make more available to people of small means credit
for provident purposes through a national system of cooperative credit,
thereby helping stabilize the credit structure of the United States.''
IRPS No. 88-1, Policy on Selection of Securities Dealers and
Unsuitable Investment Practices, 53 FR 18268, May 23, 1988, provides
that NCUA will adopt a modified version of the FFIEC's Supervisory
Policy containing guidance to federal credit unions concerning
selection of securities brokers and the avoidance of unsound investment
practices. IRPS 88-1 is outdated because it is superseded by IRPS 92-1,
Supervisory Policy Statement on Securities Activities, 57 FR 22157, May
27, 1992, which provides additional information on the development of a
portfolio policy and strategies for securities and on securities
practices that are inappropriate for an investment account.
IRPS No. 89-1, Chartering and Field of Membership Policy, 54 FR
31165, July 27, 1989, provides membership and chartering policies. IRPS
89-1 is outdated because it is superseded by IRPS 94-1, Chartering and
Field of Membership Policy, 59 FR 29066, June 3, 1994, as amended by
IRPS 96-1, 61 FR 11721, Mar. 22, 1996.
By the National Credit Union Administration Board on September
17, 1997.
Becky Baker,
Secretary to the Board.
[FR Doc. 97-25261 Filed 9-24-97; 8:45 am]
BILLING CODE 7535-01-P
