[Federal Register: July 1, 2004 (Volume 69, Number 126)]
[Proposed Rules]
[Page 39871-39873]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jy04-30]
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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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[[Page 39871]]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
Change in Official or Senior Executive Officer in Credit Unions
That Are Newly Chartered or Are in Troubled Condition
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
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SUMMARY: NCUA is proposing to revise its rule concerning the
requirement that federally-insured credit unions that are newly
chartered or troubled file notice with NCUA before adding or replacing
a board or committee member or employing or changing the duties of a
senior executive officer. The proposed amendments will clarify the
relationship between the prior notice provision and the commencement of
service provision, so as to eliminate any potential confusion. In
addition, the amendments reorganize the requirements in the current
rule to make it easier to understand.
DATES: The NCUA must receive comments on or before August 30, 2004.
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 Proposed Rule 701.14, Change in Official in Newly
Chartered or Troubled Credit Unions'' in the e-mail subject line.
Fax: (703) 518-6319. Use the subject line described above
for e-mail.
Mail: Address to Becky Baker, 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: Mary F. Rupp, Staff Attorney, Division
of Operations, Office of General Counsel, at the above address or
telephone: (703) 518-6540.
SUPPLEMENTARY INFORMATION:
Background
Section 212 of the Federal Credit Union Act and Sec. 701.14 of
NCUA's regulations require newly chartered and troubled credit unions
to seek NCUA approval before the appointment or employment of directors
and senior management officials. 12 U.S.C. 1790a; 12 CFR 701.14.
Section 701.14 sets out the substantive and procedural requirements for
credit unions seeking approval of an individual. The rule was adopted
in 1990 and has had one substantive revision since that time. 55 FR
43084 (October 26, 1990); 64 FR 28715 (May 27, 1999).
The NCUA Board has a policy of continually reviewing NCUA
regulations to ``update, clarify and simplify existing regulations and
eliminate unnecessary and redundant and unnecessary provisions.'' NCUA
Interpretive Ruling and Policy Statement (IRPS) 87-2, Developing and
Reviewing Government Regulations. As a result of NCUA's 2003 review,
the Board determined that the Change in Official or Senior Executive
Officer rule should be updated.
Summary of Proposed Changes
The only substantive proposed change to the rule is to Sec.
701.14(e), the provision dealing with commencement of service. As
currently written, this provision states a proposed director, committee
member or senior executive officer may serve temporarily until the
credit union and the individual are notified in writing of NCUA's
approval or disapproval. This provision conflicts with the prior notice
requirement in Sec. 701.14(c).
Section 701.14(c) requires at least 30 days prior notice to NCUA
before the addition of a board or committee member or the employment of
a senior executive officer. There are some exceptions to the prior
notice requirement but they are addressed in other sections of the
rule. 12 CFR 701.14(d)(2) and (3). To resolve this inconsistency, the
Board proposes adopting language in the commencement of service
provision that is similar to regulations of the Federal Deposit
Insurance Corporation and the other financial regulators. 12 CFR
303.103(b).
The revised provision is redesignated Sec. 701.14(d). It provides
for commencement of service at the expiration of the 30-day period or
any additional time under paragraph (c)(3)(iii) of the section, unless
NCUA disapproves the notice before the end of the period.
The proposed rule reorganizes the paragraph structure so that it is
easier to read. All of the notice requirements are moved to current
paragraph (d) Procedures for Notice of Proposed Change in Official or
Senior Executive Officer. This paragraph is redesignated paragraph (c)
and now includes in paragraph (c)(1) the prior notice requirements from
current paragraph (c). Current paragraph (d)(2) Waiver of prior notice
requirements is redesignated (c)(2)(i) and (iii). Current paragraph
(d)(3) Election of directors or credit committee members is retitled
Automatic waiver and redesignated (c)(2(ii).
Current paragraph (d)(1) Filing and acceptance is retitled Filing
Procedures, redesignated (c)(3), and broken into three subparts: (i)
Where to file; (ii) Contents; and (iii) Processing.
The final change is the redesignation of paragraph (f) as paragraph
(e).
Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) requires NCUA to prepare an
analysis to describe any significant economic impact any proposed
regulation may have on a substantial number of small entities. NCUA
considers credit unions having less than ten million in assets to be
small for purposes of RFA. Interpretive Ruling and Policy Statement
(IRPS) 87-2 as amended by IRPS 03-2. The proposal clarifies the
relationship between the waiver of prior notice provision and the
temporary service provision, so as to eliminate any potential
confusion. The NCUA has determined and certifies that this proposed
rule, if adopted, will not have a significant economic impact on a
substantial number of small credit
[[Page 39872]]
unions. Accordingly, the NCUA has determined that a Regulatory
Flexibility Analysis is not required.
Paperwork Reduction Act
NCUA has determined that the proposed rule would not increase
paperwork requirements under the Paperwork Reduction Act of 1995 and
regulations of the Office of Management and Budget (OMB). NCUA
currently has OMB clearance for Sec. 701.14's collection requirements
(OMB No. 3133-0121).
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 proposed rule will apply to all federally
insured credit unions. NCUA has determined that the proposed amendments
will not have a substantial direct effect 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 proposed 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
NCUA has determined that this proposed rule would not affect family
well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat.
2681 (1998).
Agency Regulatory Goal
NCUA's goal is clear, understandable regulations that impose a
minimal regulatory burden. We request your comments on whether the
proposed rule is understandable and minimally intrusive if implemented
as proposed.
List of Subjects in 12 CFR Part 701
Credit unions, Senior executive officials.
By the National Credit Union Administration Board on June 24,
2004.
Becky Baker,
Secretary of the Board.
Accordingly, the National Credit Union Administration proposes to
amend 12 CFR Part 701 as follows:
PART 701--ORGANIZATION AND OPERATIONS OF FEDERAL CREDIT UNIONS
1. The authority citation for part 701 continues to read as
follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1759, 1761a,
1761b, 1766, 1767, 1782, 1784, 1787, 1789.
2. Amend Sec. 701.14 by removing paragraphs (c) (d) and (e),
adding new paragraphs (c) and (d), and redesignating paragraph (f) as
paragraph (e) to read as follows:
Sec. 701.14 Change in official or senior executive officer in credit
unions that are newly chartered or in troubled condition.
* * * * *
(c) Procedures for Notice of Proposed Change in Official or Senior
Executive Officer--(1) Prior Notice Requirement. An insured credit
union must give NCUA written notice at least 30 days before the
effective date of any addition or replacement of a member of the board
of directors or committee member or the employment or change in
responsibilities of any individual to a position of senior executive
officer if:
(i) The credit union has been chartered for less than two years; or
(ii) The credit union meets the definition of troubled condition in
paragraph (b)(3) or (4) of this section.
(2) Waiver of Prior Notice--(i) Waiver requests. Parties may
petition the appropriate Regional Director for a waiver of the prior
notice required under this section. Waiver may be granted if it is
found that delay could harm the credit union or the public interest.
(ii) Automatic waiver. In the case of the election of a new member
of the board of directors or credit committee member at a meeting of
the members of a federally insured credit union, the prior 30-day
notice is automatically waived and the individual may immediately begin
serving, provided that a complete notice is filed with the appropriate
Regional Director within 48 hours of the election. If NCUA disapproves
a director or credit committee member, the board of directors of the
credit union may appoint its own alternate, to serve until the next
annual meeting, contingent on NCUA approval.
(iii) Effect on disapproval authority. A waiver does not affect the
authority of NCUA to issue a Notice of Disapproval within 30 days of
the waiver or within 30 days of any subsequent required notice.
(3) Filing procedures--(i) Where to file. Notices will be filed
with the appropriate Regional Director or, in the case of a corporate
credit union, with the Director of the Office of Corporate Credit
Unions. All references to Regional Director will, for corporate credit
unions, mean the Director of Office of Corporate Credit Unions. State-
chartered federally insured credit unions will also file a copy of the
notice with their state supervisor.
(ii) Contents. The notice must contain information about the
competence, experience, character, or integrity of the individual on
whose behalf the notice is submitted. The Regional Director or his or
her designee may require additional information. The information
submitted must include the identity, personal history, business
background, and experience of the individual, including material
business activities and affiliations during the past five years, and a
description of any material pending legal or administrative proceedings
in which the individual is a party and any criminal indictment or
conviction of the individual by a state or federal court. Each
individual on whose behalf the notice is filed must attest to the
validity of the information filed. At the option of the individual, the
information may be forwarded to the Regional Director by the
individual; however, in such cases, the credit union must file a notice
to that effect.
(iii) Processing. Within ten calendar days after receiving the
notice, the Regional Director will inform the credit union either that
the notice is complete or that additional, specified information is
needed and must be submitted within 30 calendar days. If the initial
notice is complete, the Regional Director will issue a written decision
of approval or disapproval to the individual and the credit union
within 30 calendar days of receipt of the notice. If the initial notice
is not complete, the Regional Director will issue a written decision
within 30 calendar days of receipt of the original notice plus the
amount of time the credit union takes to provide the requested
additional information. If the additional information is not submitted
within 30 calendar days of the Regional Director's request, the
Regional Director may either disapprove the proposed individual or
review the notice based on the information provided. If the credit
union and the individual have submitted all requested information and
the Regional Director has not issued a written decision within the
applicable time period, the individual is approved.
(d) Commencement of Service. A proposed director, committee member,
or senior executive officer may begin service after the end of the 30-
day period or any other additional period as provided under paragraph
(c)(3)(iii) of
[[Page 39873]]
this section, unless the NCUA disapproves the notice before the end of
the period.
* * * * *
[FR Doc. 04-14764 Filed 6-30-04; 8:45 am]
BILLING CODE 7535-01-P