[Federal Register Volume 62, Number 186 (Thursday, September 25, 1997)]
[Rules and Regulations]
[Pages 50245-50247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25261]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Chapter VII


Interpretive Rulings and Policy Statements

AGENCY: National Credit Union Administration (NCUA).

ACTION: Withdrawal of outdated and unnecessary Interpretive Rulings and 
Policy Statements (IRPS).

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SUMMARY: NCUA is withdrawing several of its Interpretative Rulings and 
Policy Statements (IRPS) that have become outdated or unnecessary or 
have been superseded by other IRPS or NCUA regulations. This is the 
first step in NCUA's ongoing project to update and streamline its IRPS. 
The intended purpose of withdrawing these IRPS is to ease the 
compliance burden on federally chartered and federally insured credit 
unions and provide more valuable guidance by eliminating IRPS that no 
longer effectively advance NCUA's regulatory goals or statutory 
responsibilities.

EFFECTIVE DATE: September 25, 1997.

ADDRESSES: National Credit Union Administration, 1775 Duke Street, 
Alexandria, Virginia 22314-3428.

FOR FURTHER INFORMATION CONTACT: Nicole Sippial Williams, Staff 
Attorney, Division of Operations, Office of the General Counsel, (703) 
518-6540, or at the above address.

SUPPLEMENTARY INFORMATION:

A. Background

    As part of its Regulatory Review Program, NCUA conducted a review 
of its IRPS to determine their current effectiveness. Several of the 
IRPS were found to be outdated and unnecessary and, thus, could be 
withdrawn. On March 13, 1997, the NCUA Board issued an advance notice 
of proposed rulemaking soliciting comments on a proposal to revise 
NCUA's existing IRPS. As part of the proposal, NCUA recommended 
withdrawing 17 IRPS, redesignating 9 IRPS into the NCUA Rules and 
Regulations, transferring 1 IRPS into a NCUA instructional manual or 
directive, and preserving 12 IRPS.
    NCUA received a total of 17 comments from federal credit unions, 
state-chartered credit unions, trade organizations, state leagues, and 
state credit union regulators. The commenters were overwhelmingly in 
support of NCUA's efforts to revise and streamline its IRPS and the 
proposed action to be taken with regard to each IRPS, but suggested a 
few specific changes.
    One commenter suggested that IRPS 80-10, When Federal Credit Unions 
Can Charge More Than 15% Per Annum on Government Insured or Guaranteed 
Loans, should not be withdrawn. We disagree. The guidance provided in 
this IRPS is adequately addressed in Section 701.21(e) of NCUA Rules 
and Regulations. One commenter suggested that IRPS 82-6, Corporate 
Federal Credit Union Chartering Guidelines, should not be withdrawn, 
but should remain for credit unions that believe they would be better 
served by a new corporate credit union or for state chartered credit 
unions that want to convert to federal charters. We disagree. The 
guidance provided in IRPS 82-6 is no longer relevant to chartering 
corporate credit unions. Applications for new corporate charters will 
be handled on a case-by-case basis with the NCUA Chartering and Field 
of Membership Manual (IRPS 94-1, as amended by IRPS 96-1) used as 
guidance where applicable.
    NCUA thoroughly evaluated the comments and has incorporated some of 
the suggested changes into this

[[Page 50246]]

withdrawal of IRPS and will continue to do so as the IRPS are further 
revised.
    IRPS that were marked for redesignation into NCUA Rules and 
Regulations, according to the March 13, 1997, proposal, will be 
redrafted as proposed rules and submitted to the public for notice and 
comment at a later date. IRPS to be preserved, will be further reviewed 
for possible revision, and if any changes are made, the IRPS will be 
reissued.

B. IRPS To Be Withdrawn

    At this time NCUA is withdrawing 18 IRPS that it considers either 
outdated, since they no longer provide relevant or useful guidance, or 
unnecessary, since the guidance provided has already been incorporated 
into NCUA regulations or manuals. In addition, 10 IRPS are being 
withdrawn because they have been superseded by other IRPS or NCUA 
regulations and NCUA wants to reemphasize to the public that these IRPS 
are no longer viable.
    IRPS No. 79-1, Statement of Policy Regarding Relationship of Credit 
Union Service Corporations and Existing Accounting Service Centers, 44 
FR 21762, Apr. 12, 1979, provides that in order to assist existing 
accounting service centers and ``leeway'' organizations in complying 
with a new CUSO rule implemented by NCUA, NCUA agrees to forego taking 
any action for a period of one year. IRPS 79-1 is outdated because it 
addresses a specific NCUA policy to allow a one-year phase-in period 
for a new CUSO rule implemented by NCUA at that time.
    IRPS No. 79-2, Share Accounts, 44 FR 39382, July 6, 1979, provides 
that as a result of a rule change deregulating share accounts, NCUA no 
longer requires share draft accounts to be identical to regular share 
accounts and confirms that share draft accounts are regular share 
accounts with terms and dividend rates that can vary from other regular 
share accounts. IRPS 79-2 is unnecessary because the guidance provided 
is restated in Section 701.35 of NCUA Rules and Regulations.
    IRPS No. 79-3, Amortization of Long Term Real Estate Loans, 44 FR 
39182, July 5, 1979, states that absent NCUA approval, federal credit 
unions must amortize real estate loans by ``substantially equal monthly 
installments'' with two exceptions. The total of principal and interest 
for the first and last monthly installment may differ slightly from the 
total of the other installments. IRPS 79-3 is outdated because it is 
superseded by Sections 5040.5.2.1.1 and 5040.5.2.1.2 of the NCUA 
Accounting Manual. The Accounting Manual establishes two methods of 
amortizing loans that may be used by federal credit unions.
    IRPS No. 79-4, Investment Activities, 44 FR 51195, Aug. 31, 1979, 
established certain accounting procedures for permissible investment 
activities. IRPS 79-4 is unnecessary because the guidance provided is 
restated in the current, as well as, the newly revised version of Part 
703 NCUA of Rules and Regulations and in the NCUA Accounting Manual.
    IRPS No. 79-5, Insurance Activities, 44 FR 43711, July 26, 1979, 
provides that participation in a draft payment system that involves the 
presentment and settlement of claims by a federal credit union, with 
subsequent reimbursement to the federal credit union by the insurer is 
impermissible. Thus, a federal credit union's involvement with an 
insurance vendor is limited to the forwarding of claim forms to the 
vendor for processing. IRPS 79-5 is outdated because it interprets an 
obsolete provision. In addition Part 721 of NCUA Rules and Regulations, 
addressing rules governing insurance, limits a federal credit union's 
insurance activities to performing administrative functions on behalf 
of a vendor.
    IRPS No. 79-7, Liquidity Reserve, 44 FR 61172, Oct. 24, 1979, 
provides guidance on NCUA's position on (1) provisions of Part 742, (2) 
the calculation and disclosure of liquidity reserves, and (3) 
procedures for requesting additional time to meet the liquidity 
reserve. IRPS 79-7 is outdated because Part 742 has been removed from 
NCUA Rules and Regulations. The NCUA Board believed that efficient 
liquidity management varies among credit unions, and liquidity 
decisions should be the responsibility of individual credit unions 
boards of directors.
    IRPS No. 79-8, Public Observance and Availability of Information 
Regarding Board Meetings; Interim Sunshine Act Policy Statement, 44 FR 
70709, Dec. 10, 1979, sets forth NCUA's policy governing the 
implementation of the Sunshine Act. IRPS 79-8 is unnecessary because 
the guidance provided is restated in Secs. 791.9-791.18 of NCUA Rules 
and Regulations.
    IRPS No. 79-9, Rate of Interest, 44 FR 74799, Dec. 18, 1979, 
provides that the effect of a compensating balance must be considered 
in determining usury limits on federal credit union member loans. IRPS 
79-9 is outdated because the permissible interest rate that credit 
union may charge has changed from 12% to 15%, and the practice of 
requesting compensating balances is no longer prevalent among credit 
unions. Any potential questions from a federal credit union, relating 
to compensating balances, can be handled without the continuing need 
for this IRPS.
    IRPS No. 79-10, Notice of Proposed Consumer Program, 45 FR 7738, 
Feb. 4, 1980, sets forth NCUA's proposed consumer program as requested 
by Executive Order 12160. IRPS 79-10 is outdated because it is 
superseded by IRPS 80-7, the Final Notice of Consumer Program, 45 FR 
50260, July 28, 1980.
    IRPS No. 80-7, Final Notice of Consumer Program, 45 FR 50260, July 
28, 1980, sets forth NCUA's final consumer program which was to be 
governed by the Office of Consumer Affairs. IRPS 80-7 is outdated 
because it is superseded by NCUA Instruction 12400.2, Compliance 
Activities: Complaint Handling and Documentation of Violations, which 
sets forth NCUA's current policy for handling consumer affairs.
    IRPS No. 80-10, When Federal Credit Unions Can Charge More Than 15 
Percent Per Annum on Government Insured or Guaranteed Loans, 45 FR 
71353, Oct. 28, 1980, provides that government insured and guaranteed 
loans may exceed the federal usury rate for federal credit unions. IRPS 
80-10 is unnecessary because the guidance provided is restated in 
Sec. 701.21(e) of NCUA Rules and Regulations.
    IRPS No. 80-11, State Chartered Federally Insured Credit Unions as 
Most Favored Lenders, 45 FR 78624, Nov. 26, 1980, sets forth the 
conditions upon which federally insured state chartered credit unions 
(FISCUs) are granted most favored lender status pursuant to the Federal 
Credit Union Act. IRPS 80-11 is outdated because it has been superseded 
by IRPS 81-3, State Chartered Federally Insured Credit Unions as ``Most 
Favored Lenders,'' 45 FR 78624, Nov. 26, 1980, which removed the 
conditions set forth in IRPS 80-11 so that most favored lender status 
would apply to any loan that an FISCU grants.
    IRPS No. 80-12, Verification of Member Accounts, 46 FR 9919, Jan. 
30, 1981, provides that federal credit unions are allowed to use 
statistical sampling in satisfaction of statutory and regulatory member 
account verification requirements. IRPS 80-12 is unnecessary because 
the guidance provided is restated in Chapter 24 of NCUA's Supervisory 
Committee Guide.
    IRPS No. 81-1, Definitions--Exclusions from Gross Income in 
Computing Reserve Requirements, 46 FR 13204, Feb. 20, 1981, provides 
that credit unions receiving Central Liquidity Fund dividends may 
exclude those dividends in computing federally-imposed reserve 
requirements. IRPS 81-

[[Page 50247]]

1 is unnecessary because the guidance provided is restated in Section 
6090.5 of the NCUA Accounting Manual.
    IRPS No. 81-2, Federal Funds, 46 FR 14887, Mar. 3, 1981, authorizes 
certain federal funds transactions for federal credit unions and 
establishes guidelines and accounting procedures for the same. IRPS 81-
2 is unnecessary because the guidance provided is restated in 
Sec. 703.100(g) of NCUA Rules and Regulations.
    IRPS No. 81-4, Developing Government Regulations, 46 FR 29248, June 
1, 1981, sets forth NCUA's procedures for developing and reviewing its 
regulations. IRPS 81-4 was drafted in response to the passage of the 
Financial Simplification Act of 1980, the Regulatory Flexibility Act of 
1980, 5 U.S.C. et seq., and the Paperwork Reduction Act of 1980, 44 
U.S.C. 3501 et seq. IRPS 81-4 is now outdated due to changes in the 
law, including the repeal of the Financial Simplification Act of 1980, 
and is superseded by IRPS 87-2 which sets forth NCUA's current 
procedures for developing and reviewing its regulations.
    IRPS No. 81-5, Proposed Policy Statement Release of Consumer 
Examination Reports, 46 FR 29575, June 2, 1981, sets forth conditions 
under which individual federal credit unions may release consumer 
compliance examination reports to third parties. IRPS 81-5 is outdated 
because consumer compliance examinations are no longer performed as 
separate examinations, but are performed in conjunction with safety and 
soundness examinations producing one examination report. This 
examination report is an exempt document. The release of an exempt 
document is addressed in Part 792 of NCUA Rules and Regulations.
    IRPS No. 81-8, Full and Fair Disclosure Requirements, 47 FR 23685, 
June 1, 1982, provides that compliance with Section 2000 of the 
Accounting Manual will place a federal credit union in compliance with 
the full and fair disclosure requirements of Part 702 of the NCUA 
Regulations. IRPS 81-8 is unnecessary because the guidance provided is 
restated in Sec. 702.3 of NCUA Rules and Regulations and Section 1000 
of the NCUA Accounting Manual.
    IRPS No. 81-9, Share, Share Draft and Share Certificate Accounts, 
46 FR 57668, Nov. 25, 1981, sets forth NCUA's position regarding the 
calculation and assessment of premature withdrawal penalties for 
variable-rate and multiple-addition share certificate accounts. IRPS 
81-9 is outdated because NCUA deregulated Sec. 701.35 of the NCUA Rules 
and Regulations, 47 FR 17979, Apr. 27, 1982, giving a federal credit 
union's board of directors the responsibility for determining the terms 
and conditions governing share, share draft, and share certificate 
accounts, including premature withdrawal penalties.
    IRPS No. 82-1, Membership in Federal Credit Unions, 47 FR 16775, 
Apr. 20, 1982, provides that federal credit unions may offer membership 
to borrowers whose loans have been purchased from a liquidated credit 
union and that they may serve multiple occupational group. IRPS 82-1 is 
outdated because it is superseded by IRPS 82-3, Membership in Federal 
Credit Unions, 47 FR 26808, June 22, 1982.
    IRPS No. 82-3, Membership in Federal Credit Unions, 47 FR 26808, 
June 22, 1982, provides further guidance on field of membership issues 
and authorizes multiple associational group charters. IRPS 82-3 is 
outdated because it is superseded by IRPS 89-1, Chartering and Field of 
Membership Policy, 54 FR 31165, July 27, 1989.
    IRPS No. 83-2, Membership in Federal Credit Unions, 48 FR 22899, 
May 23, 1983, clarified that the definition of a ``well-defined area'' 
stated in IRPS 82-3 includes home offices and branch offices for 
purposes of adding additional associational and occupational groups. 
IRPS 83-2 is outdated because it is superseded by IRPS 89-1, Chartering 
and Field of Membership Policy, 54 FR 31165, July 27, 1989.
    IRPS No. 84-1, Membership in Federal Credit Unions, 49 FR 46536, 
Nov. 27, 1984, combines IRPS 82-3 and IRPS 83-2, sets out modifications 
made since the two IRPS were published, incorporates several unwritten 
policies, and sets forth a new policy on service to senior citizens and 
retirees. IRPS 84-1 is outdated because it is superseded by IRPS 89-1, 
Chartering and Field of Membership Policy, 54 FR 31165, July 27, 1989.
    IRPS No. 85-1, Trustees and Custodians of Pension Plans, 50 FR 
48176, Nov. 22, 1985, provides guidelines for federal credit unions 
involved with self-directed IRA and Keogh accounts. IRPS 85-1 is 
unnecessary because the guidance provided is restated in Part 724 of 
NCUA Rules and Regulations.
    IRPS No. 86-2, Joint Policy Statement on Basic Financial Services, 
51 FR 42083, Nov. 21, 1986, provides that NCUA has adopted FFIEC's 
recommendation encouraging credit unions to offer basic financial 
services accessible to low and moderate-income members. IRPS 86-2 is 
unnecessary because it restates the basic mission of credit unions. As 
stated in the Federal Credit Unions Act, 12 U.S.C. 1751, the Act was 
established ``to make more available to people of small means credit 
for provident purposes through a national system of cooperative credit, 
thereby helping stabilize the credit structure of the United States.''
    IRPS No. 88-1, Policy on Selection of Securities Dealers and 
Unsuitable Investment Practices, 53 FR 18268, May 23, 1988, provides 
that NCUA will adopt a modified version of the FFIEC's Supervisory 
Policy containing guidance to federal credit unions concerning 
selection of securities brokers and the avoidance of unsound investment 
practices. IRPS 88-1 is outdated because it is superseded by IRPS 92-1, 
Supervisory Policy Statement on Securities Activities, 57 FR 22157, May 
27, 1992, which provides additional information on the development of a 
portfolio policy and strategies for securities and on securities 
practices that are inappropriate for an investment account.
    IRPS No. 89-1, Chartering and Field of Membership Policy, 54 FR 
31165, July 27, 1989, provides membership and chartering policies. IRPS 
89-1 is outdated because it is superseded by IRPS 94-1, Chartering and 
Field of Membership Policy, 59 FR 29066, June 3, 1994, as amended by 
IRPS 96-1, 61 FR 11721, Mar. 22, 1996.

    By the National Credit Union Administration Board on September 
17, 1997.
Becky Baker,
Secretary to the Board.
[FR Doc. 97-25261 Filed 9-24-97; 8:45 am]
BILLING CODE 7535-01-P