[Federal Register: October 27, 2006 (Volume 71, Number 208)]
[Rules and Regulations]
[Page 62875-62876]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27oc06-1]
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Rules and Regulations
Federal Register
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
RIN 3133-AD30
General Lending Maturity Limit and Other Financial Services
AGENCY: National Credit Union Administration (NCUA).
ACTION: Interim final rule with request for comments.
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SUMMARY: NCUA is amending its rules to implement amendments to the
Federal Credit Union Act (FCU Act) made by the Financial Services
Regulatory Relief Act of 2006 (Reg Relief Act). The interim final rule
revises the maturity limit in the general lending rule and permits
Federal credit unions to provide certain, limited financial services to
nonmembers within their fields of membership.
DATES: This interim final rule is effective October 27, 2006. Comments
must be received by NCUA on or before December 26, 2006.
ADDRESSES: You may submit comments by any of the following methods
(Please send comments by one method only):
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
NCUA Web Site: http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html.
Follow the
instructions for submitting comments.
E-mail: Address to regcomments@ncua.gov. Include ``[Your
name] Comments on Interim Final Rule--Part 701'' in the e-mail subject
line.
Fax: (703) 518-6319. Use the subject line described above
for e-mail.
Mail: Address to Mary Rupp, Secretary of the Board,
National Credit Union Administration, 1775 Duke Street, Alexandria,
Virginia 22314-3428.
Hand Delivery/Courier: Same as mail address.
FOR FURTHER INFORMATION CONTACT: Moisette Green, Staff Attorney, Office
of General Counsel, at the above address or telephone: (703) 518-6540.
SUPPLEMENTARY INFORMATION:
A. General Lending Maturity Limit
The Financial Services Regulatory Relief Act of 2006, Public Law
109-351, amended the general lending maturity limit in section 107(5)
of the FCU Act from 12 years to 15 years. 12 U.S.C. 1757(5). This
interim final rule amends the provision in NCUA's general lending
regulation, 12 CFR 701.21(c)(4), which addresses the loan maturity
limit. The Board is revising the lending rule to reflect the statutory
change in the maturity limit. Residential real estate loans and mobile
home loans are subject to separate maturity limits. 12 U.S.C.
1757(5)(A)(i), (ii); 12 CFR 701.21(f), (g).
NCUA recognizes the prompt corrective action rule has references to
the 12-year loan term in the alternative risk-based net worth
calculation. 12 CFR 702.107. NCUA staff will evaluate if this
calculation will change as a result of the statutory amendments to the
general maturity limit and address necessary changes in a future
rulemaking.
B. Financial Services to Persons Within the Field of Membership
The Reg Relief Act also relieved a longstanding limitation on FCUs
regarding financial services to nonmembers. In 1959, Congress
established section 107(12) of the FCU Act, which authorized FCUs to
cash checks and money orders for FCU members. Sec. 8, Public Law 86-
354, 73 Stat. 631 (1959). The Garn-St. Germain Depository Institutions
Act of 1982 further amended section 107(12) of the FCU Act to authorize
FCUs to sell negotiable checks, money orders, and other similar money
transfer instruments to FCU members. Sec. 518, Public Law 97-320, 96
Stat. 1530 (1982). At that time, Congress recognized the law did not
permit an FCU to offer wire transfer services or other substitutions
for money orders to its members, and the changes in FCU authority were
limited to members. S. Rpt. 97-536, p. 68. Therefore, the NCUA Office
of General Counsel (OGC) strictly interpreted that FCUs could not cash
checks, sell money orders or other negotiable instruments, or provide
wire transfers to nonmembers, even if they were within an FCU's field
of membership, except in narrow circumstances where providing these
services was incidental to providing an authorized service. See, OGC
Legal Opinion 02-0250 (February 22, 2002).
Section 503 of the Reg Relief Act amended the FCU Act to permit
FCUs to provide certain financial services to persons within their
fields of membership. Congress intended to allow FCUs ``to sell
negotiable checks, money orders, and other similar transfer
instruments, including international and domestic electronic fund
transfers, to anyone eligible for membership, regardless of their
membership status.'' S. Rpt. 109-256, p. 5; H. Rpt. 109-356 Part 1, p.
63. To implement this authority, this interim final rule creates a new
regulatory section to clarify NCUA's position regarding financial
services to persons within an FCU's field of membership. Accordingly,
the Board is issuing a new Sec. 701.30 to implement section 503 of the
Reg Relief Act.
When providing financial services to nonmembers, FCUs should be
mindful that they will have to meet some of the same compliance
obligations with these transactions as they currently have for similar
member transactions. FCUs should ensure compliance with the Bank
Secrecy Act, Public Law 91-508, the Customer Identification Program
regulation, 31 CFR 103.121, NCUA security rules, 12 CFR part 748, and
other anti-money laundering requirements when servicing persons who may
not provide information that would be provided if they applied for
membership. Additionally, pursuant to the Financial Right to Privacy
Act, 15 U.S.C. 6801 et seq. and NCUA privacy rules, 12 CFR part 716,
FCUs must safeguard the private financial information of and provide
the required privacy notices to nonmembers who purchase or receive
financial services.
C. Interim Final Rule
The NCUA Board is issuing this rulemaking as an interim final rule
because there is a strong public interest in having advantageous and
consumer-oriented rules that enhance credit union services for members
and consumers.
[[Page 62876]]
Specifically, permitting FCUs to grant loans with the longer maturity
will reduce the amount of periodic loan payments for members. The rule
also allows FCUs to provide limited but necessary financial services to
persons within their fields of membership who may not otherwise be able
to obtain these services. Additionally, this interim final rule is
consistent with statutory amendments in the Reg Relief Act. NCUA also
finds these reasons are good cause to dispense with the 30-day delayed
effective date requirement under section 553(d)(3) of the
Administrative Procedure Act (APA). Accordingly, the Board finds that,
pursuant to 5 U.S.C. 553(b)(3), notice and public procedures are
unnecessary and contrary to the public interest; and, pursuant to 5
U.S.C. 553(d)(3), the rule will be effective upon publication in the
Federal Register. Although the rule is being issued as an interim final
rule and is effective upon publication, the Board encourages interested
parties to submit comments.
Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act requires NCUA to prepare an analysis
to describe any significant economic impact a rule may have on a
substantial number of small credit unions, defined as those under ten
million dollars in assets. This rule only clarifies and improves the
available services FCUs may provide to their members and persons within
their fields of membership, without imposing any regulatory burden. The
interim final amendments would not have a significant economic impact
on a substantial number of small credit unions, and, therefore, a
regulatory flexibility analysis is not required.
Paperwork Reduction Act
NCUA has determined that the interim final rule would not increase
paperwork requirements under the Paperwork Reduction Act of 1995 and
regulations of the Office of Management and Budget. 44 U.S.C. 3501 et
seq.; 5 CFR part 1320.
Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, NCUA, an independent
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies
with the executive order. The interim final rule would not have
substantial direct effects on the states, on the connection between the
national government and the States, or on the distribution of power and
responsibilities among the various levels of government. NCUA has
determined that this rule does not constitute a policy that has
federalism implications for purposes of the executive order.
The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this interim final rule would not
affect family well-being within the meaning of section 654 of the
Treasury and General Government Appropriations Act, 1999, Public Law
105-277, 112 Stat. 2681 (1998).
Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996,
Public Law 104-121 (SBREFA), provides generally for congressional
review of agency rules. A reporting requirement is triggered in
instances where NCUA issues a final rule as defined by Section 551 of
the APA. 5 U.S.C. 551. NCUA has requested a SBREFA determination from
the Office of Management and Budget, which is pending. As required by
SBREFA, NCUA will file the appropriate reports with Congress and the
General Accounting Office so that the interim rule may be reviewed.
List of Subjects in 12 CFR Part 701
Check, Check cashing, Credit, Credit unions, Electronic fund
transfer, Money order, Money transfer.
By the National Credit Union Administration Board on October 19,
2006.
Mary F. Rupp,
Secretary of the Board.
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Accordingly, NCUA amends 12 CFR part 701 as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
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1. The authority citation for part 701 is revised to read as follows:
Authority: 12 U.S.C. 1752(5), 1757, 1765, 1766, 1781, 1782,
1787, 1789; Title V, Pub. L. 109-351; 120 Stat. 1966.
Sec. 701.21 [Amended]
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2. Section 701.21 is amended by:
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a. Removing ``may not exceed 12 years'' in the first sentence and
adding in its place ``may not exceed 15 years'' in paragraph (c)(4).
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b. Removing the phrase ``12-year'' and adding, in its place, the phrase
``15-year'' in paragraph (f).
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3. Section 701.30 is added to read as follows:
Sec. 701.30 Services for nonmembers within the field of membership.
Federal credit unions may provide the following services to persons
within their fields of membership, regardless of membership status:
(a) Selling negotiable checks including travelers checks, money
orders, and other similar money transfer instruments (including
international and domestic electronic fund transfers); and
(b) Cashing checks and money orders and receiving international and
domestic electronic fund transfers for a fee.
[FR Doc. E6-17835 Filed 10-26-06; 8:45 am]
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