Federal Register / Vol. 62, No. 233 / Thursday, December 4, 1997 / Proposed Rules 64187

2. Amend Appendix A to part 708a to

revise paragraph (2)(m) to read as

follows:

Appendix A to Part 708a—Notice to

Members of Special Meeting, Disclosure

and Ballot

* * * * *

(2) * * *

(m) The cover of the Disclosure Statement

must contain the following statement in bold,

appropriately modified to the extent that this

statement does not accurately describe the

transaction:

PLEASE READ THIS DISCLOSURE

DOCUMENT. IT CONTAINS IMPORTANT

INFORMATION ABOUT YOUR CREDIT

UNION.

If the credit union converts to a savings

bank, the institution will no longer be

democratically controlled with each member

having one equal vote. As explained in this

Disclosure, the larger depositors will have

more votes than the smaller depositors.

This action would enable the credit union

to further change its organizational structure

in the future. For example, if the institution

were to convert to a stock institution, you

would lose your equity ownership interest.

Any future decision to convert to a stock

institution would be made by a vote of the

members, however, the weight your vote

carries will be based on the amount of your

deposit in the institution.

If the credit union converts to a savings

bank, your board of directors may receive

financial benefits not available to other

members. For example, Board members

could be compensated and they could obtain

stock on terms not available to other

members, after waiting the two years

required by credit union regulation.

* * * * *

[FR Doc. 97–31501 Filed 12–3–97; 8:45 am]

BILLING CODE 7535–01–P

NATIONAL CREDIT UNION

ADMINISTRATION

12 CFR Part 708b

Mergers of Federally-Insured Credit

Unions; Voluntary Termination or

Conversion of Insured Status

AGENCY: National Credit Union

Administration (‘‘NCUA’’).

ACTION: Notice of proposed rulemaking.

SUMMARY: The NCUA Board propose to

amend the disclosure forms in NCUA’s

regulations relating to mergers and

voluntary termination or conversion of

insured status in mergers of federallyinsured credit unions. The amendments

inform the members that, if their credit

union converts to nonfederal insurance,

the private insurance fund insuring

their accounts is not backed by the full

faith and credit of the United States

government. It also informs the

members that, if their credit union

terminates insurance, their shares,

excluding those covered for one year,

are no longer insured by the federal

government or any other entity.

DATES: Comments must be received on

or before February 2, 1998.

ADDRESSES: Comments should be

directed to Becky Baker, Secretary of the

Board. Mail or hand-deliver comments

to: National Credit Union

Administration, 1775 Duke Street,

Alexandria, VA 22314–3428. Fax

comments to (703) 518–6319. E-mail

comments to boardmail@ncua.gov.

Please send comments by one method

only.

FOR FURTHER INFORMATION CONTACT:

Mary F. Rupp, Staff Attorney, Office of

General Counsel, at the above address or

telephone: (703) 518–6540.

SUPPLEMENTARY INFORMATION:

Background

The Federal Deposit Insurance Act, 12

U.S.C. 1811 et seq., requires credit

unions that are not federally insured to

advise their members on ‘‘all periodic

statements of account, on each signature

card, and on each passbook, certificate

or deposit, or similar instrument

evidencing a deposit a notice that the

institution is not federally insured, and

that if the institution fails, the Federal

government does not guarantee that

depositors will get back their money.’’

12 U.S.C. 1831t(b)(1). Clearly, a member

of a credit union being asked to vote on

a proposal that would replace federal

insurance with private insurance is

entitled to a similar disclosure.

Currently, NCUA’s regulations do not

require disclosure of this information.

Proposal

Sections 708(b).301 (a)(1) and (b)(1)

contain the form notices that are sent to

the members if a credit union is seeking

to terminate federal insurance. The

proposal would amend the notices by

clarifying to the members that if the

credit union fails, their shares are no

longer insured by the federal

government or any other entity.

Sections 708b.302(a)(1), (a)(2), (b)(1)

and (b)(2) contain the form notices and

ballots that are sent to the members if

a credit union is seeking to convert from

federal to nonfederal insurance. The

proposal would add a sentence to the

notice and ballot explaining that the

insurance provided by the NCUA is

backed by the full faith and credit of the

United States government and that the

private insurance the member will

receive if the credit union converts is

not backed by the United States

government.

The Board believes this information

must be disclosed in order for the

member to make an informed vote on

the proposed transaction. Disclosure of

this information is consistent with the

disclosure requirements Congress

imposes on credit unions lacking federal

insurance.

Regulatory Procedures

Regulatory Flexibility Act

The Regulatory Flexibility Act

requires the NCUA to prepare an

analysis to describe any significant

economic effect any regulation may

have on a substantial number of small

credit unions, meaning those under $1

million in assets. The NCUA Board has

determined and certifies that the

proposed rule if adopted will not have

a significant economic impact on a

substantial number of small credit

unions. The reasons for this

determination are that the proposed rule

requires the addition of two sentences to

the disclosure form used by credit

unions converting to nonfederal

insurance. The addition of these two

sentences will not increase the costs of

the conversion and therefore will not

create a financial burden. Accordingly,

the NCUA Board has determined that a

Regulatory Flexibility Analysis is not

required.

Executive Order 12612

Executive Order 12612 requires

NCUA to consider the effect of its

actions on state interests. The proposed

amendments will apply to all federally

insured credit unions. The proposed

amendments are not designed or

intended to interfere with the state

regulation of state-chartered

institutions. However, the Board is

modeling this proposal on federal

legislation that specifically applies to

state-chartered credit unions. The

NCUA Board has determined that the

proposed amendments are not likely to

have any direct effect on states, the

relationship between the states, or the

distribution of power and

responsibilities among the various

levels of government.

Paperwork Reduction Act

The proposed amendment requires

the credit union to provide to its

members information that is provided

by NCUA in the proposal. The

Paperwork Reduction Act does not

apply to disclosures that are directives

for a person to disclose information

completely supplied by the agency. 5

CFR 1320.3(c)(2).
64188 Federal Register / Vol. 62, No. 233 / Thursday, December 4, 1997 / Proposed Rules

List of Subjects in 12 CFR Part 708b

Bank deposit insurance, Credit

unions, Reporting and recordkeeping

requirements.

By the National Credit Union

Administration Board on November 24, 1997.

Becky Baker,

Secretary of the Board.

Accordingly, NCUA proposes to

amend 12 CFR part 708b as follows:

PART 708b—MERGERS OF

FEDERALLY-INSURED CREDIT

UNIONS; VOLUNTARY TERMINATION

OR CONVERSION OF INSURED

STATUS

1. The authority citation for part 708b

continues to read as follows:

Authority: 12 U.S.C. 1766, 1785, 1786,

1789.

2. In § 708b.301, paragraph (a)(1) is

amended by revising the second

paragraph of the Notice of Proposal to

Terminate Federal Insurance and

paragraph (b)(1) is amended by revising

the third paragraph of the Notice of

Proposal to Merge and Terminate

Federal Insurance to read as follows:

§ 708b.301 Termination of insurance.

(a) * * *

(1) Notice of Proposal to Terminate

Federal Insurance

* * * * *

If approved, any deposits made by you

after the date of termination, either new

deposits or additions to existing accounts,

will not be insured by the NCUA or any other

entity. In the event the credit union fails,

these deposits are not insured by the federal

government. No provision has been made for

alternative insurance, therefore, these

deposits will be uninsured.

* * * * *

(b) * * *

(1) Notice of Proposal to Merge and

Terminate Federal Insurance

* * * * *

Any deposits made by you after the

effective date of the merger, either new

deposits or additions to existing accounts,

will not be insured by the NCUA or any other

entity. In the event the credit union fails,

these deposits are not insured by the federal

government. No provision has been made for

alternative insurance, therefore, these

deposits will be uninsured. Accounts in the

merging Credit Union on the date of the

merger, up to a maximum of $100,000 for

each member, will continue to be insured, as

provided in the Federal Credit Union Act, for

one (1) year after the close of business on the

date of the merger, but any withdrawals after

the close of business on that date will reduce

the insurance coverage by the amount of the

withdrawal.

* * * * *

3. In § 708b.302, paragraph (a)(1) is

amended by adding two sentences at the

end of the second paragraph of the

Notice of Proposal to Convert to

Nonfederally-Insured Status, paragraph

(a)(2) is amended by adding a sentence

at the end of the second paragraph of

the ballot, paragraph (b)(1) is amended

by adding two sentences at the end of

the second paragraph of the Notice of

Proposal to Merge and Convert to

Nonfederally-Insured Status and

paragraph (b)(2) is amended by adding

a sentence at the end of the second

paragraph of the ballot to read as

follows:

§ 708b.302 Conversion of insurance.

(a) * * *

(1) Notice of Proposal to Convert to

Nonfederally-Insured Status

* * * * *

* * * The insurance provided by the

National Credit Union Administration, an

independent agency of the United States, is

backed by the full faith and credit of the

United States government. The private

insurance you will receive from

llllllllll is not guaranteed by

the federal or any state government.

(2) * * * The private insurance provided

by llllllllll is not backed by the

full faith and credit of the United States

government as is the federal insurance

provided by the National Credit Union

Administration.

* * * * *

(b) * * *

(1) Notice of Proposal to Merge and

Convert to Nonfederally-Insured Status

* * * * *

* * * The insurance provided by the

National Credit Union Administration, an

independent agency of the United States, is

backed by the full faith and credit of the

United States government. The private

insurance you will receive from

llllllllll is not guaranteed by

the federal or any state government.

(2) * * * The private insurance provided

by llllllllll is not backed by the

full faith and credit of the United States

government as is the federal insurance

provided by the National Credit Union

Administration.

* * * * *

[FR Doc. 97–31502 Filed 12–3–97; 8:45 am]

BILLING CODE 7535–01–P

RAILROAD RETIREMENT BOARD

20 CFR Part 211

RIN 3220–AB23

Creditable Railroad Compensation

AGENCY: Railroad Retirement Board.

ACTION: Proposed rule.

SUMMARY: The Railroad Retirement

Board hereby proposes to amend its

regulations to limit the crediting of pay

for time lost to periods prior to the

judgment or agreement establishing that

payment or in the case of pay for time

lost not attributable to a judgment or

settlement, prior to the date of payment.

DATES: Comments must be received on

or before February 2, 1998.

ADDRESSES: Secretary to the Board,

Railroad Retirement Board, 844 North

Rush Street, Chicago, Illinois 60611.

FOR FURTHER INFORMATION CONTACT:

Thomas W. Sadler, Senior Attorney,

Railroad Retirement Board, 844 N. Rush

Street, Chicago, Illinois 60611,

telephone 312–751–4513, TTD 312–

751–4701.

SUPPLEMENTARY INFORMATION: Payments

made for periods during which an

employee is absent from the active

service of an employer are considered to

be ‘‘pay for time lost’’ and creditable

compensation under the Railroad

Retirement Act. Pay for time lost

includes pay received due to an injury

or due to loss of earnings attributable to

the employee being placed in a position

paying less money. Employers are

required to allocate pay for time lost to

the months in which the time was

actually lost. Pursuant to section 211.3

of the current regulations, the Board

will accept an allocation of pay for time

lost for periods after the judgment or

settlement, and after the payment is

made. The practice has been costly to

the railroad retirement system in that

taxes under the Railroad Retirement Tax

Act are imposed on railroad

compensation at the time of payment up

to the maximum taxable amount for the

year in which the payment is made.

Accordingly, if a personal injury suit is

settled in 1997 and the railroad agrees

to pay the employee $300,000 to be

allocated as pay for time lost over the

period 1997 through 2002 with $50,000

being designated to each year as pay for

time lost, the employee would receive

six years of retirement credit, but taxes

would cover only one year of those

additional credits.

There is no requirement in the statute

that pay for time lost be creditable

prospectively and, in the view of the

majority of the Board, to allow

prospective crediting of pay for time lost

cannot be justified in view of the

additional, potentially large costs to the

system.

Section 1(h)(2) of the Railroad

Retirement Act requires that pay for

time lost must be paid with respect to

an identifiable period of absence. This

language, in the view of a majority of

the Board, suggests that pay for time lost

should be credited only to a known

period of absence in the past. It is

impossible to predict whether or not an