Federal Register / Vol. 76, No. 56 / Wednesday, March 23, 2011 / Rules and Regulations 16235 

received two comment letters in 

response to the Interim Final Rule, both 

from national credit union industry 

trade associations. 

Both commenters supported the 

Interim Final Rule without reservation, 

addressing collateral matters as well. 

One commenter advocated a separate 

rulemaking to consider further 

broadening the definition of ‘‘low risk 

assets’’ to add other ‘‘similar low-risk 

assets such as credit union investments 

in Federal Home Loan Bank securities.’’ 

This final rule leaves open to the NCUA 

Board the option of adding debt 

instruments guaranteed by other 

Government entities to the ‘‘low risk 

assets’’ portfolio once NCUA has had an 

opportunity to assess its experience 

with the NGN offerings in retrospect 

(including whether the NCUA Guaranty 

was tapped), and to consider other risks 

associated with those instruments. 

In regard to the NGN offerings, the 

other commenter encouraged maximum 

transparency and disclosure of 

information about the NGNs in order to 

help those credit unions that lack the 

expertise and resources to 

independently asses the NGNs and to 

make informed business decisions about 

whether to invest. To ensure 

comprehensive transparency and 

disclosure of information about each 

NGN offering, the offerings are being 

conducted for NCUA by a Wall Street 

investment banking firm that specializes 

in the issuance of structured debt 

products by governmental entities. 

Further, as reflected primarily in the 

Offering Memorandum for each NGN 

offering, NCUA is relying on the advice 

of two law firms that have substantial 

expertise in the legal disclosure 

requirements that apply to these 

transactions. 

In view of the commenters’ support of 

the Interim Final Rule, there is no 

reason to revise the amendatory 

language. Accordingly, the NCUA Board 

adopts in final the language of the 

Interim Final Rule without alteration. 

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 entities (primarily 

those under ten million dollars in 

assets). This rule will not have a 

significant economic impact on a 

substantial number of small credit 

unions. Thus, a Regulatory Flexibility 

Analysis is not required. 

Paperwork Reduction Act 

NCUA has determined that this rule 

will not increase paperwork 

requirements under the Paperwork 

Reduction Act of 1995 and regulations 

of the Office of Management and 

Budget. Control number 3133–0129 has 

been issued for Part 702 and will be 

displayed at the table at 12 CFR part 

795. 

Executive Order 13132 

Executive Order 13132 encourages 

independent regulatory agencies to 

consider the impact of their regulatory 

actions on State and local interests. 

NCUA, an independent regulatory 

agency as defined in 44 U.S.C. 3502(5), 

voluntarily adheres to the fundamental 

federalism principles addressed by the 

Executive Order. This rule would not 

have a 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. Accordingly, this 

rule does not constitute a policy that has 

federalism implications for purposes of 

the Executive Order. 

Treasury and General Government 

Appropriations Act, 1999 

NCUA has determined that the rule 

will 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 

(Pub. L. 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 

does not believe this rule is a ‘‘major 

rule’’ within the meaning of the relevant 

sections of SBREFA. The Office of 

Management and Budget has 

determined that the Interim Final Rule 

is not a ‘‘major rule’’ for purposes of 

SBREFA. As required by SBREFA, 

NCUA will file appropriate reports with 

Congress and the General 

Accountability Office so this rule may 

be reviewed. 

List of Subjects in 12 CFR Part 702 

Credit unions, Reporting and 

recordkeeping requirements. 

By the National Credit Union 

Administration Board on March 17, 2011. 

Mary F. Rupp, 

Secretary of the Board. 

Accordingly, the Interim Final Rule 

amending 12 CFR part 702, which was 

published at 75 FR 66298 on October 

28, 2010, is adopted as a Final Rule 

without change. 

[FR Doc. 2011–6754 Filed 3–22–11; 8:45 am] 

BILLING CODE 7535–01–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 707 

RIN 3133–AD58 

Corporate Credit Unions, Technical 

Corrections 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Final rule. 

SUMMARY: In 2010, NCUA issued 

technical corrections to its corporate 

credit union rule, published in the 

Federal Register of October 20, 2010. 

NCUA is issuing this final rule adopting 

the technical corrections without 

alteration. 

DATES: This rule is effective March 23, 

2011. 

FOR FURTHER INFORMATION CONTACT: 

Elizabeth Wirick, Staff Attorney, Office 

of General Counsel, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314– 

3428, or telephone: (703) 518–6540. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In October 2010, NCUA published a 

comprehensive overhaul to its corporate 

credit union rule, 12 CFR part 704. 75 

FR 64786 (Oct. 20, 2010). After 

publication, NCUA discovered that 

three technical corrections were 

necessary, and NCUA issued an interim 

final rule containing the corrections in 

December. 75 FR 47173 (Dec. 20, 2010). 

The technical corrections are as follows: 

Section 704.2 Definition of 

‘‘collateralized debt obligation’’ 

The final revisions to part 704 

prohibited corporate credit unions 

(corporates) from purchasing certain 

overly complex or leveraged 

investments, including collateralized 

debt obligations (CDOs). 75 FR 64786, 

64793 (October 20, 2010). These 

prohibitions were intended to protect 

the corporates from the potential for 

excessive investment losses. 74 FR 

65210, 65237 (December 9, 2009) 


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16236 Federal Register / Vol. 76, No. 56 / Wednesday, March 23, 2011 / Rules and Regulations 

(preamble to proposed part 704 

revisions). The definition of CDO, 

however, was overly broad, in that it 

inadvertently included particular 

investments that did not—when subject 

to the other credit risk and asset liability 

management limitations of part 704— 

present the risk of excessive losses. This 

final rule amends the CDO definition to 

ensure the following are not prohibited: 

Commercial mortgage backed securities; 

securities collateralized by Agency 

mortgage-backed securities (Agency 

MBS); and securities that are fully 

guaranteed as to principal and interest 

by the United States Government and its 

agencies and government sponsored 

enterprises. 

Paragraph 704.6(b) Exemptions to 

§ 704.6 

Section 704.6 generally requires 

corporate investments meet certain 

single obligor concentration limits, 

sector concentration limits, and credit 

rating requirements. Paragraph 704.6(b) 

exempts certain investments, including 

investments generally issued by or 

guaranteed by the U.S. Government or 

its agencies or sponsored enterprises, 

from the requirements of § 704.6. As 

stated in the preamble to the recent 

corporate rule revisions, however, the 

Board did not intend for this exemption 

to apply to agency MBS in the context 

of sector limits. 75 FR 64786, 64806 

(Oct. 20, 2010) (discussing paragraph 

704.6(d)(1)(i)). As drafted, however, not 

only the sector limits apply to agency 

MBS, but the other requirements, 

including single obligor limits and 

credit rating requirements, inadvertently 

apply to agency MBS. This correction 

clarifies the list of exemptions in 

§ 704.6(b) to make clear that Agency 

MBS are subject to the sector 

concentration limits in 704.6(d) but not 

the other requirements of § 704.6. 

Appendix A, Model Form H 

The rule as published included an 

incorrect date instruction on Model 

Form H in Appendix A. Id. at 64851. 

Model Form H included introductory 

text indicating that the form was for use 

before October 20, 2011. In fact, because 

Model Form H deals with perpetual 

contributed capital, the form should be 

used only on and after October 20, 2011. 

The correction replaces the phrase 

‘‘before’’ with the phrase ‘‘on or after.’’ 

II. Interim Final Rule 

NCUA issued an interim final rule 

with request for comment on November 

24, 2010. As discussed in the preamble 

to the interim final rule, the Board 

issued the rule as an interim final rule 

because the changes were technical in 

nature and it was in the public interest 

to have these corrections become 

effective on the same date as the other 

revisions to the corporate rule. 75 FR 

47173, 47174 (Oct. 20, 2010). 

III. Summary of Comments 

NCUA received two comments on the 

interim final rule, both from credit 

union trade associations. Neither 

commenter suggested changes to the 

rule text, but one of the commenters 

sought additional clarification regarding 

NCUA’s treatment of commercial 

mortgage backed securities (CMBS) 

under the revised definition of CDO. 

The commenter requested that NCUA 

state its reasoning for the exclusion of 

CMBS from the definition of CDO and 

also state that if the structure of CMBS 

changes in a way that increases the 

corporates’ risk of loss on these 

investments, NCUA will remove this 

exclusion. 

This commenter appears to have 

misunderstood the effect of the change 

in the definition. The change operates to 

make CMBS a permissible investment 

for corporate credit unions—that is, 

securities collateralized by commercial 

mortgage loans. CDOs collateralized by 

mortgage securities, commercial or 

residential, remain prohibited under the 

definition of CDO. Investments in plainvanilla CMBS, which are collateralized 

by loans, do not pose the same risk as 

investments in securities collateralized 

by other securities where an investor 

cannot as easily determine the quality of 

the underlying loans. Also, as the 

commenter correctly noted, corporate 

credit union investments in CMBS are 

subject to the sector concentration limits 

imposed under § 704.6(d). Finally, 

NCUA will continually monitor 

corporates’ investments and make 

adjustments to the corporates’ 

investment authorities where 

appropriate. 

IV. Regulatory Procedures 

Section D of the Supplementary 

Information to the November 2010 

interim final rule sets forth the Board’s 

analyses under the Regulatory 

Flexibility Act (5 U.S.C. 601 et seq.), the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3506; 5 CFR part 1320 Appendix 

A.1), the Small Business Regulatory 

Enforcement Fairness Act (Pub. L. 104– 

121), Executive Order 13132, and the 

Treasury and General Government 

Appropriations Act (Pub. L. 105–277, 

112 Stat. 2681 1998). See 75 FR 71527— 

71528. Because the final amendments 

are clarifications and do not alter the 

substance of the analyses and 

determinations accompanying that final 

rule, the Board continues to rely on 

those analyses and determinations for 

purposes of this rulemaking. 

List of Subjects in 12 CFR Part 704 

Credit unions, Corporate Credit 

Union, Reporting and recordkeeping 

requirements. 

By the National Credit Union 

Administration Board on March 17, 2011. 

Mary F. Rupp, 

Secretary of the Board. 

Accordingly, the interim final rule 

amending 12 CFR Part 704, which was 

published at 75 FR 71526 on November 

24, 2010, is adopted as a final rule 

without change. 

[FR Doc. 2011–6755 Filed 3–22–11; 8:45 am] 

BILLING CODE 7535–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 91 

[Docket No. FAA–2011–0246; Amendment 

No. 91–321; SFAR No. 112] 

RIN 2120–AJ93 

Prohibition Against Certain Flights 

Within the Tripoli (HLLL) Flight 

Information Region (FIR) 

AGENCY: Federal Aviation 

Administration (FAA), Department of 

Transportation (DOT). 

ACTION: Final rule. 

SUMMARY: This action prohibits flight 

operations within the Tripoli (HLLL) 

Flight Information Region (FIR) by all 

U.S. air carriers; U.S. commercial 

operators; persons exercising the 

privileges of a U.S. airman certificate, 

except when such persons are operating 

a U.S.-registered aircraft for a foreign air 

carrier; and operators of U.S.-registered 

civil aircraft, except when such 

operators are foreign air carriers. The 

FAA finds this action necessary to 

prevent a potential hazard to persons 

and aircraft engaged in such flight 

operations. 

DATES: This action is effective March 21, 

2011. 

FOR FURTHER INFORMATION CONTACT: For 

technical questions about this final rule, 

contact: David Catey, William Gonzalez, 

or Steven Laurenzo, Air Transportation 

Division, Flight Standards Service, 

Federal Aviation Administration, 800 

Independence Avenue, SW., 

Washington, DC 20591. Telephone: 

202–267–3732, 202–267–4080, and 202– 

267–8772, respectively. For legal 

questions contact: Lorna John, Office of 

the Chief Counsel, AGC–200, Federal 


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