[Federal Register Volume 72, Number 46 (Friday, March 9, 2007)]
[Rules and Regulations]
[Pages 10593-10595]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-4225]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Parts 745 and 747


Share Insurance Appeals; Clarification of Enforcement Authority 
of the NCUA Board

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: NCUA is issuing a final rule to implement amendments to the 
Federal Credit Union Act (FCU Act) made by the Financial Services 
Regulatory Relief Act of 2006 (Reg Relief Act) enacted by Congress on 
October 13, 2006. This final rule amends NCUA's regulations to assure 
they are consistent with the statutory changes made by the Reg Relief 
Act. The final rule adopts the amendments as stated in the interim 
final rule issued in November 2006. It clarifies: That an appeal from a 
final NCUA Board decision regarding share insurance coverage shall be 
to the appropriate Federal District Court; that the NCUA Board may 
terminate the share insurance of any insured credit union for violation 
of any condition imposed by the Board in connection with any action on 
any application, notice, or other request by the credit union or an 
institution-affiliated party; and that Orders of Suspension, 
Prohibition and Removal issued by the NCUA Board remain effective 
against institution-affiliated parties regardless of whether they 
remain institution-affiliated parties at the time the Order is 
considered or issued.

DATES: The interim rule is adopted as final April 9, 2007.

[[Page 10594]]


FOR FURTHER INFORMATION CONTACT: John K. Ianno, Senior Trial Attorney, 
Office of General Counsel, at the above address or telephone: (703) 
518-6540.

SUPPLEMENTARY INFORMATION: NCUA issued the interim rule published in 
the Federal Register on November 22, 2006 ( 71 FR 67439).

A. Overview of Comments Received

    NCUA received three comment letters regarding the interim final 
rule. Two were from national credit union trade associations and a 
third was from a state credit union league.
    In general, each of the commenters agreed with the proposed 
changes. Two letters requested that NCUA provide examples or issue 
guidelines to explain the circumstances under which the NCUA Board 
might undertake formal administrative action in order to terminate the 
insured status of a credit union. The Board does not believe it would 
be helpful to try and enumerate the various situations when it might 
conclude that it is necessary to institute a formal administrative 
action against a particular credit union. Experience indicates that 
each case tends to be fact specific. There are many variables that 
influence a decision on what an appropriate course of action would be 
to correct a specific problem. Generally the Board will begin a formal 
administrative action such as termination of insurance only after it 
has exhausted other informal attempts to correct problems that have 
been identified. These less formal mechanisms include but are not 
limited to: (1) Action items contained in a document of resolution; (2) 
letters of understanding and agreement; (3) preliminary warning 
letters; and (4) cease and desist orders.
    One commenter asked that the NCUA Board clarify the effective date 
of the change in venue for insurance appeals. The Board notes that when 
enacting the Reg Relief Act Congress did not indicate what venue would 
be appropriate for pending insurance appeals. Neither the text of the 
statute nor its legislative history clearly indicates whether petitions 
for review that were pending in the Courts of Appeal before the Act's 
passage should be reviewed in the District Courts under the new 
provision or remain in the Courts of Appeal under the old. Because 
there is no statutory provision that would allow a Court of Appeals to 
transfer a pending insurance appeal filed prior to the October 13, 2006 
enactment of the statute, the Board believes that such cases should 
remain in the Court of Appeals. Venue for appeals of NCUA Board 
insurance determinations filed on or after that date shall be filed in 
the appropriate U.S. district court.

B. Insurance Appeals

    The Reg Relief Act amended section 207(d) of the FCU Act, which 
addresses the resolutions of disputes relating to any claim for 
insurance coverage. 12 U.S.C. 1787(d). The final rule amends the 
provision in NCUA's regulations, 12 CFR 745.203(c), that sets forth the 
appropriate venue for seeking judicial review of a final determination 
by the Board relating to a claim for insurance coverage.
    The current regulation provides for judicial review by the United 
States Court of Appeals for the District of Columbia or the court of 
appeals for the Federal circuit where the credit union's principal 
place of business is located. The final rule revises the regulation to 
reflect the statutory change that a final agency determination by the 
Board on a claim for insurance coverage is reviewable by the United 
States district court for the Federal judicial district where the 
principle place of business of the credit union is located.

C. Expansion of Enforcement Authority

    The Reg Relief Act amended three provisions of Section 206 of the 
FCU Act, 12 U.S.C. 1786, to broaden the NCUA Board's authority to take 
enforcement actions for violations of conditions imposed in any action 
on any application, notice, or other request by a credit union or an 
institution-affiliated party. Such violations can serve as a basis for 
cease and desist orders, removal and prohibition orders, and civil 
money penalties. Previously such enforcement actions could only be 
taken upon a violation of conditions imposed in ``the granting of any 
application or other request by the credit union.'' The amendments to 
Sections 747.1 and 202 of NCUA's Regulations conform the language of 
the regulation to that of the FCU Act as amended.

D. Clarification of Suspension, Prohibition and Removal Authority

    The Reg Relief Act amended Section 206(i)(1) of the FCU Act, 12 
U.S.C. 1786(i)(1) to clarify the NCUA Board's authority to issue Orders 
against institution-affiliated parties regardless of whether they 
remain institution-affiliated parties of a credit union when the Order 
is considered or issued. The new statutory language makes clear that 
the NCUA Board has the authority to issue the Order even if the subject 
is no longer affiliated with the institution. The amendments to 
Sections 747.303 and 304 of NCUA's Regulations conform the language of 
the regulation to that of the FCU Act as amended.

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 clarifies NCUA's enforcement 
authority and identifies the appropriate venue for appeals of final 
share insurance determinations. It does not impose any additional 
regulatory burden. The interim final amendments will 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 final rule will 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 final rule will 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).

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996, 
Pub. L. 104-121 (SBREFA), provides

[[Page 10595]]

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 final rule 
may be reviewed.

List of Subjects

12 CFR Part 745

    Credit unions, Share insurance.

12 CFR Part 747

    Administrative practice and procedure, Bank deposit insurance, 
Claims, Credit unions, Equal access to justice, Investigations, 
Lawyers, Penalties.


0
Accordingly, NCUA adopts as final the interim rule amending 12 CFR 
parts 745 and 747.

    By the National Credit Union Administration Board on March 1, 
2007.
Mary F. Rupp,
Secretary of the Board.
 [FR Doc. E7-4225 Filed 3-8-07; 8:45 am]
BILLING CODE 7535-01-P