40928 Federal Register / Vol. 62, No. 147 / Thursday, July 31, 1997 / Rules and Regulations

(v) Civil penalty for a stockyard

owner, livestock market agency and

dealer compliance order violations,

codified at 7 U.S.C. 215(a), has a

maximum of $550.

(vi) Civil penalty for a failure to file

required reports, codified at 15 U.S.C.

50, has a maximum of $110.

(vii) Civil penalty for live poultry

dealer violations, codified at 7 U.S.C.

228b-2(b), has a maximum of $22,000.

(viii) Civil penalty for a violation,

codified at 7 U.S.C. 86(c), has a

maximum civil penalty of $82,500.

(7) Federal Crop Insurance

Corporation—Civil penalty for any

person who willfully and intentionally

provides materially false or inaccurate

information to the Federal Crop

Insurance Corporation or an approved

insurance provider reinsured by the

Federal Crop Insurance Corporation,

codified at 7 U.S.C. 1506(n)(1)(A), has a

maximum civil penalty of $10,000.

(8) All USDA Agencies—Civil penalty

for work hours and safety violations,

codified at 40 U.S.C. 328, has a

maximum of $11 per day of violation.

PART 278—PARTICIPATION OF

RETAIL FOOD STORES, WHOLESALE

FOOD CONCERNS, AND INSURED

FINANCIAL INSTITUTIONS

1. The authority citation for part 278

continues to read as follows:

Authority: 7 U.S.C. 2011–2032.

§ 278.6 [Amended]

2. 7 CFR 278.6(a) is amended by—(a)

striking ‘‘$10,000’’ and inserting ‘‘an

amount specified in § 3.91(b)(3)(A) of

this title’’; and (b) striking ‘‘$20,000’’

and inserting ‘‘amount specified in Sec.

3.91(b)(3)(B) of this title’’.

PART 400—FEDERAL CROP

INSURANCE CORPORATION,

GENERAL ADMINISTRATIVE

REGULATIONS

1. The authority citation for part 400

continues to read as follows:

Authority: 7 U.S.C. 1506(l).

§ 400.454 [Amended]

2. 7 CFR 400.454(a) introductory text

is amended by striking ‘‘$10,000’’ and

inserting ‘‘an amount specified in

§ 3.91(b)(7) of this title’’.

Dan Glickman,

Secretary of Agriculture.

[FR Doc. 97–19967 Filed 7–30–97; 8:45 am]

BILLING CODE 3410–01–P

NATIONAL CREDIT UNION

ADMINISTRATION

12 CFR Part 701

Loan Interest Rates

AGENCY: National Credit Union

Administration (NCUA).

ACTION: Final rule.

SUMMARY: The current 18 percent per

year federal credit union loan rate

ceiling is scheduled to revert to 15

percent on September 9, 1997, unless

otherwise provided by the NCUA Board

(Board). A 15 percent ceiling would

restrict certain categories of credit and

adversely affect the financial condition

of a number of federal credit unions. At

the same time, prevailing market rates

and economic conditions do not justify

a rate higher than the current 18 percent

ceiling. Accordingly, the Board hereby

continues an 18 percent federal credit

union loan rate ceiling for the period

from September 9, 1997 through March

8, 1999. Loans and lines of credit

balances existing prior to May 18, 1987,

may continue to bear their contractual

rate of interest, not to exceed 21 percent.

The Board is prepared to reconsider the

18 percent ceiling at any time should

changes in economic conditions

warrant.

EFFECTIVE DATE: September 9, 1997.

ADDRESSES: National Credit Union

Administration, 1775 Duke Street,

Alexandria, Virginia, 22314–3428.

FOR FURTHER INFORMATION CONTACT:

Evan Gillette, Investment Officer, Office

of Investment Services, at the above

address, telephone number: (703) 518–

6620.

SUPPLEMENTARY INFORMATION:

Background

Public Law 96–221, enacted in 1979,

raised the loan interest rate ceiling for

federal credit unions from 1 percent per

month (12 percent per year) to 15

percent per year. It also authorized the

Board to set a higher limit, after

consulting with Congress, the

Department of Treasury and other

federal financial agencies, for a period

not to exceed 18 months, if the Board

determined that: (1) Money market

interest rates have risen over the

preceding 6 months; and (2) prevailing

interest rate levels threaten the safety

and soundness of individual credit

unions as evidenced by adverse trends

in growth, liquidity, capital and

earnings.

On December 3, 1980, the Board

determined that the foregoing

conditions had been met. Accordingly,

the Board raised the loan ceiling for 9

months to 21 percent. In the unstable

environment of the first-half of the

1980s, the Board extended the 21

percent ceiling four times. On March 11,

1987, the Board lowered the loan rate

ceiling from 21 percent to 18 percent

effective May 18, 1987. This action was

taken in an environment of falling

market interest rates from 1980 to early

1987. The ceiling has remained at 18

percent to the present.

The Board believes that the 18 percent

ceiling will permit credit unions to

continue to meet their current lending

programs, permit flexibility so that

credit unions can react to any adverse

economic developments, and ensure

that any increase in the cost of funds

would not affect the safety and

soundness of federal credit unions.

The Board would prefer not to set

loan interest rate ceilings for federal

credit unions. Credit unions are

cooperatives and balance loan and share

rates consistent with the needs of their

members and prevailing market rates.

The Board supports free lending

markets and the ability of federal credit

union boards of directors to establish

loan rates that reflect current market

conditions and the interests of their

members. Congress has, however,

imposed loan rate ceilings since 1934.

In 1979, Congress set the ceiling at 15

percent but authorized the Board to set

a ceiling in excess of 15 percent, if

conditions warrant. The following

analysis justifies a ceiling above 15

percent, but at the same time does not

support a ceiling above the current 18

percent. The Board is prepared to

reconsider this action at any time

should changes in economic conditions

warrant.

Money Market Interest Rates

During the 16-month period following

the Board’s March 1996 decision to

continue the 18 percent ceiling, shortterm Treasury rates (3, 6 and 12 months)

increased from 11 to 19 basis points

(Table 1).

TABLE 1.—TREASURY RATES

Maturity

Yields

as of

Mar.

11,

1996

(percent)

Yields

as of

July

17,

1997

(percent)

Change

in basis

points

3-month ............. 5.09 5.20 11

6-month ............. 5.17 5.31 14

1-year ................ 5.37 5.56 19

Treasury rates rose slightly during the

recent six-month period from January 1

to July 17, 1997. Treasury rates on the

3, 6 and 12 month maturities increased
Federal Register / Vol. 62, No. 147 / Thursday, July 31, 1997 / Rules and Regulations 40929

1Of the 7,152 FCUs, 4,083 had zero balances in

the 15 percent and above category or did not report

a balance for the year-end 1996 reporting period.

between 1 and 7 basis points (Table 2).

During this period, the Federal Reserve

(Fed) increased the overnight Fed Funds

rate by 25 basis points to a target rate

of 5.50 percent.

TABLE 2.—TREASURY RATES

Maturity

Yields

as of

Jan. 1,

1997

(percent)

Yields

as of

July

17,

1997

(percent)

Change

in basis

points

3-month ............. 5.19 5.20 1

6-month ............. 5.30 5.31 1

1-year ................ 5.49 5.56 7

There are also expectations that rates

may rise in the months ahead. The US

economy has continued to expand.

Since early 1996, employment growth

and labor force participation has been

quite strong, with unemployment rates

declining from 5.6 percent (Dec. 1995)

to 5.0 percent (June 1997).

Further declines in the

unemployment rate, rising consumer

confidence, continued income growth

and a strong equity market have lead

many to be concerned that consumer

demand may rise at a faster pace in the

months ahead. This could result in

inflationary pressures and higher

interest rates. Therefore, it is important

to maintain the 18 percent ceiling.

Lowering the interest rate ceiling at this

time could cause an unnecessary burden

on credit unions.

Financial Implications for Credit

Unions

For at least 871, 28%1 of the reporting

credit unions, the most common rate on

unsecured loans was above 15 percent.

While the bulk of credit union lending

is below 15 percent, small credit unions

and credit unions that have instituted

risk based lending programs require

interest rates above 15 percent to

maintain liquidity, capital, earnings and

growth.

Loans to members who have not yet

established a credit history or have

weak credit histories have more credit

risk. Credit unions must charge rates to

cover the potential of higher than usual

losses for such loans. There are

undoubtedly more than 871 credit

unions charging over 15 percent for

unsecured loans to such members.

Many credit unions have ‘‘Credit

Builder’’ or ‘‘Credit Rebuilder’’ loans

but only report the ‘‘most common’’ rate

on the Call Report for unsecured loans.

Lowering the interest rate ceiling for

credit unions will discourage credit

unions from making these loans. Credit

seekers’ options will be reduced and

most of the affected members will have

no alternative but to turn to other

lenders who will charge much higher

rates.

Small credit unions will be

particularly affected by a lower loan

ceiling since they tend to have a higher

level of unsecured loans, typically with

lower loan balances. Thus, small credit

unions making small loans to members

with poor or no credit histories are

struggling with far higher costs than the

typical credit union. Both young people

and lower income households have

limited access to credit and, absent a

credit union, often pay rates of 24 to 30

percent to other lenders. Rates between

15 and 18 percent are attractive to such

members.

Table 3 shows the number of credit

unions in each asset group where the

most common rate is more than 15

percent for unsecured loans.

TABLE 3.—FEDERAL CREDIT UNIONS

WITH MOST COMMON UNSECURED

LOAN RATES GREATER THAN 15

PERCENT (DECEMBER 1996)

Peer group by asset

size

Total

all

FCUs

Number of

FCUs w/

loan

rates>15%

$0–2 mil ...................... 2,132 231

$2–10 mil .................... 2,490 317

$10–50 mil .................. 1,733 208

$50 mil + ..................... 797 115

Total 1 .................. 7,152 871

1Of this total, 4,083 had either a zero balance or did not report rate balances 15 percent and above.

Among the 871 credit unions where

the most common rate is more than 15

percent for unsecured loans, 242 have

20 percent or more of their assets (Table

4) in this category. For these credit

unions, lowering the rates would

damage their liquidity, capital, earnings

and growth.

TABLE 4.—FEDERAL CREDIT UNIONS

WITH MOST COMMON UNSECURED

LOAN RATES GREATER THAN 15

PERCENT AND MORE THAN 20 PERCENT OF ASSETS IN UNSECURED

LOANS (DECEMBER 1996)

Peer group by asset

size

Avg. percentage

of loan

rates

>15% to

assets

Number

of FCUs

meeting

both criteria

$0–2 mil .................... 43.8 108

$2–10 mil .................. 29.6 75

$10–50 mil ................ 26.8 45

$50 mil + ................... 24.9 14

Total ................... 35.1 242

In conclusion, the Board has

continued the federal credit union loan

interest rate ceiling of 18 percent per

year for the period from September 9,

1997, through March 8, 1999. Loans and

line of credit balances existing on May

16, 1987, may continue to bear interest

at their contractual rate, not to exceed

21 percent. Finally, the Board is

prepared to reconsider the 18 percent

ceiling at any time during the extension

period, should changes in economic

conditions warrant.

Regulatory Procedures

Administrative Procedure Act

The Board has determined that notice

and public comment on this rule are

impractical and not in the public

interest, 5 U.S.C. 553(b)(B). Due to the

need for a planning period prior to the

September 9, 1997, expiration date of

the current rule, and the threat to the

safety and soundness of individual

credit unions with insufficient

flexibility to determine loan rates, final

action of the loan rate ceiling is

necessary.

Regulatory Flexibility Act

For the same reasons, a regulatory

flexibility analysis is not required, 5

U.S.C. 604(a). However, the Board has

considered the need for this rule, and

the alternatives, as set forth above.

Paperwork Reduction Act

There are no paperwork requirements.

Executive Order 12612

This final rule does not affect state

regulation of credit unions. It

implements provisions of the Federal

Credit Union Act applying only to

federal credit unions.

List of Subjects in 12 CFR Part 701

Credit, Credit unions, Loan interest

rates.
40930 Federal Register / Vol. 62, No. 147 / Thursday, July 31, 1997 / Rules and Regulations

By the National Credit Union

Administration Board on July 23, 1997.

Becky Baker,

Secretary of the Board.

Accordingly, NCUA amends 12 CFR

chapter VII as follows:

PART 701—[AMENDED]

1. The authority citation for Part 701

is revised to read as follows:

Authority: 12 U.S.C. 1752(5), 1755, 1756,

1757, 1759, 1761a, 1761b, 1766, 1767, 1782,

1784, 1787, 1789. Section 701.6 is also

authorized by 15 U.S.C. 3717. Section 701.31

is also authorized by 15 U.S.C. 1601 et seq.;

42 U.S.C. 1981 and 3601–3610. Section

701.35 is also authorized by 42 U.S.C. 4311–

4312.

2. Section 701.21(c)(7)(ii)(C) is revised

to read as follows:

§ 701.21 Loans to members and lines of

credit to members.

* * * * *

(c) * * *

(7) * * *

(ii) * * *

(C) Expiration. After March 8, 1999, or

as otherwise ordered by the NCUA

Board, the maximum rate on federal

credit union extensions of credit to

members shall revert to 15 percent per

year. Higher rates may; however, be

charged, in accordance with paragraphs

(c)(7)(ii) (A) and (B) of this section, on

loans and line of credit balances

existing on or before March 8, 1999.

* * * * *

[FR Doc. 97–19935 Filed 7–30–97; 8:45 am]

BILLING CODE 7535–01–U

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Food and Drug Administration

21 CFR Part 510

New Animal Drugs; Change of Sponsor

AGENCY: Food and Drug Administration,

HHS.

ACTION: Final rule.

SUMMARY: The Food and Drug

Administration (FDA) is amending the

animal drug regulations to reflect a

change of sponsor for 46 new animal

drug applications (NADA’s) from Solvay

Animal Health, Inc., to Fort Dodge

Animal Health, A Division of American

Cyanamid Co.

EFFECTIVE DATE: July 31, 1997.

FOR FURTHER INFORMATION CONTACT:

Thomas J. McKay, Center for Veterinary

Medicine (HFV–102), Food and Drug

Administration, 7500 Standish Pl.,

Rockville, MD 20855, 301–827–0213.

SUPPLEMENTARY INFORMATION: Solvay

Animal Health, Inc., 1201 Northland

Dr., Mendota Heights, MN 55120, has

informed FDA that it has transferred the

ownership of, and all rights and

interests in, the following approved

NADA’s to Fort Dodge Animal Health,

A Division of American Cyanamid Co.,

P.O. Box 1339, Fort Dodge, IA 50501:

NADA No. Drug Name

006–417 .................................................................................................... Recovr

006–103 .................................................................................................... Follutein

006–707 .................................................................................................... Sulquin 6–50

008–274 .................................................................................................... Pig Scour Tablets

009–035 .................................................................................................... Ophtaine

011–141 .................................................................................................... Unistat-2

011–482 .................................................................................................... Vetame Tabs and Injection

011–879 .................................................................................................... Rubfrafer Injection

012–198 .................................................................................................... Vetalog Parenteral

012–258 .................................................................................................... Panalog Ointment (Solvaderm)

013–624 .................................................................................................... Vetalog Tabs

014–250 .................................................................................................... Novastat

031–448 .................................................................................................... Rheaform Bolus

031–553 .................................................................................................... Esb3 Powder & Solution

032–319 .................................................................................................... Furox Aerosol Spray

032–738 .................................................................................................... Pacitran Soluble

033–127 .................................................................................................... Vetisulid Bolus

033–318 .................................................................................................... Vetisulid Injectable

033–319 .................................................................................................... Vetisulid Tabs

033–373 .................................................................................................... Vetisulid Powder

034–536 .................................................................................................... Aklomix

034–537 .................................................................................................... Novastat-3

034–705 .................................................................................................... Equipoise

035–388 .................................................................................................... Novastat-W

039–666 .................................................................................................... Unistat-3

040–181 .................................................................................................... Vetisulid Oral Suspension

046–146 .................................................................................................... Vetalog Cream

046–147 .................................................................................................... Dirocide Syrup

049–892 .................................................................................................... Spanbolet II

055–060 .................................................................................................... Potassium G penicillin

055–064 .................................................................................................... Redicillin (Princillin)

055–066 .................................................................................................... Redicillin (Princillin)

055–071 .................................................................................................... Redicillin (Princillin)

065–130 .................................................................................................... Crystaline Pro Penicillin

065–174 .................................................................................................... Crysticillin 300 A.S. Vet

065–410 .................................................................................................... Tetra–Sal Soluble

091–192 .................................................................................................... Renografin 76

091–240 .................................................................................................... Renovist

091–327 .................................................................................................... Gastrogratin

093–512 .................................................................................................... Dirocide Tabs

096–676 .................................................................................................... Panalog Cream

099–388 .................................................................................................... Vetalog Oral Powder

126–232 .................................................................................................... Calfspan

131–808 .................................................................................................... Dirocide Syrup