This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

67549

Vol. 62, No. 248

Monday, December 29, 1997

NATIONAL CREDIT UNION

ADMINISTRATION

12 CFR Part 725

Central Liquidity Facility

AGENCY: National Credit Union

Administration (NCUA).

ACTION: Final rule.

SUMMARY: The National Credit Union

Central Liquidity Facility (the Facility),

a mixed-ownership government

corporation within the NCUA, serves as

a liquidity source for its member credit

unions. The NCUA Board is issuing this

rule to permit the Facility to take, in

lieu of a blanket security interest, a first

priority security interest in specific

assets of the credit union with a net

book value at least equal to 110% of the

amounts owed on the Facility advance

or Agent loan. The final rule will

provide credit unions with greater

flexibility in their normal operations

while ensuring that the Facility is

adequately protected for any loans that

it makes.

DATES: Effective January 28, 1998.

FOR FURTHER INFORMATION CONTACT:

Herbert S. Yolles, President, National

Credit Union Central Liquidity Facility,

1775 Duke Street, Alexandria, VA

22314–3428. Telephone Number (703)

518–6391 or (703) 518–6363.

SUPPLEMENTARY INFORMATION:

A. Background

Public Law 96–630, Title XVIII, 12

U.S.C. 1795, et seq., enacted in 1979,

created the Facility. Its purpose is to

improve general financial stability by

meeting the liquidity needs of credit

unions and thereby encourage savings,

support consumer and mortgage

lending, and provide basic financial

resources to all segments of the

economy.

Most credit unions are members of a

corporate credit union. In addition,

credit unions are now eligible for

Federal Home Loan Bank membership.

Both corporate credit unions and

Federal Home Loan Banks require that

a credit union provide collateral for

borrowing. In addition, credit unions

may also borrow from other financial

institutions and are required to provide

collateral for such borrowings. While

multiple security agreements are not

prohibited under the current regulation,

the presence of competing security

interests could result in the Facility

being under-collateralized for any

advances.

B. Comments

Twenty-six comment letters were

received. Of these, eleven were received

from corporate credit unions, eleven

from natural person credit unions and

four from credit union associations. All

twenty-six concurred with the final rule

change. One natural person credit union

commented that the requirement to

provide collateral with a net book value

of at least 110 percent of the amount

owed appeared to be excessive. They

recommend that NCUA establish a loanto-value ratio of 100 percent unless an

assessment of risk, i.e., as indicated by

the credit union’s last examination,

indicated the need for a lower loan-tovalue. The Board continues to believe

that collateral with a net book value of

at least 110 percent of the amount owed

is needed to adequately protect the

Facility.

Collateral—Net Book Value

Currently, Section 725.19 requires

that the Facility secure each loan with

a blanket security interest in all of the

assets of the member credit union. The

final rule gives the Facility the option of

taking either a blanket security interest

or a first priority security interest in

specific collateral of the credit union

with a net book value at least equal to

110% of the amounts owed on the

Facility advance or Agent loan. This

requirement will permit a credit union

to provide collateral to other lenders

and still have the ability to borrow from

the Facility, so long as it has other assets

with sufficient net book value to

support the Facility advance or Agent

loan. It also will permit the Facility to

accept a security interest in all assets of

the credit union as collateral for a

Facility advance to a Regular member.

However, the net book value of the

assets will still have to be at least equal

to 110% of the amounts owed on the

Facility advance or Agent loan.

Superior Perfected Interest

In calculating the value of the assets

covered by the security interest, assets

in which any third party has a superior

perfected interest will be excluded.

Section 208 Assistance

The final rule also expressly

authorizes the Facility to accept the

guarantee of the National Credit Union

Share Insurance Fund as collateral for

borrowings by a credit union. This

provision facilitates advances by the

Facility to credit unions receiving

assistance under Section 208 of the

Federal Credit Union Act.

Regulatory Procedures

Regulatory Flexibility Act

The NCUA Board certifies that this

final rule will not have a significant

impact on a substantial number of small

credit unions (those under $1 million in

assets). The final rule will make it easier

for credit unions to obtain loans from

both Facility and other sources.

Accordingly, a regulatory flexibility

analysis was not required.

Paperwork Reduction Act

The final rule has no information

collection requirements; therefore, no

Paperwork Reduction Act analysis was

required.

Executive Order 12612

The NCUA Board has determined that

the final rule will 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 various levels of

government.

List of Subjects in 12 CFR Part 725

Credit, Credit unions, Reporting and

recordkeeping requirements.

By the National Credit Union

Administration Board on December 18, 1997.

Becky Baker,

Secretary of the Board.

For the reasons set forth in the

preamble, NCUA amends 12 CFR part

725 as set forth below:
67550 Federal Register / Vol. 62, No. 248 / Monday, December 29, 1997 / Rules and Regulations

PART 725—NATIONAL CREDIT UNION

ADMINISTRATION CENTRAL

LIQUIDITY FACILITY

1. The authority citation for part 725

continues to read as follows:

Authority: Secs. 301–307 Federal Credit

Union Act, 92 Stat. 3719–3722 (12 U.S.C.

1795–1795f).

2. Section 725.19 is revised to read as

follows:

§ 725.19 Collateral requirements.

(a) Each Facility advance and each

Agent loan shall be secured by a first

priority security interest in collateral of

the credit union with a net book value

at least equal to 110% of all amounts

due under the applicable Facility

advance or Agent loan, or by guarantee

of the National Credit Union Share

Insurance Fund.

(b) The Facility may accept as

collateral for each Facility advance to a

Regular member, a security interest in

all assets of the Regular member;

provided however, that the value of any

assets in which any third party has a

perfected security interest that is

superior to the security interest of the

Facility shall be excluded for purposes

of complying with the requirements of

paragraph (a) of this section.

(c) The Facility may accept as

collateral for each Facility advance to an

Agent member, a security interest in the

Agent loans for which the Facility

advance was made; provided however,

that the collateral for such Agent loan

meets the requirements of paragraph (a)

of this section.

[FR Doc. 97–33750 Filed 12–24–97; 8:45 am]

BILLING CODE 7535–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 97–NM–294–AD; Amendment

39–10264; AD 97–26–21]

RIN 2120–AA64

Airworthiness Directives; Boeing

Model 747–100, 747–200, 747–300,

747SR, and 747SP Series Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule; request for

comments.

SUMMARY: This amendment adopts a

new airworthiness directive (AD) that is

applicable to certain Boeing Model 747–

100, 747–200, 747–300, 747SR, and

747SP series airplanes. This action

requires a one-time inspection to detect

cracking of the longeron splice fittings

at stringer 11, on the left and right sides

at body station 2598, and replacement of

any cracked fitting with a new fitting.

This amendment is prompted by reports

that fatigue cracking was found on

longeron splice fittings. The actions

specified in this AD are intended to

detect and correct such fatigue cracking,

which could result in reduced

controllability of the horizontal

stabilizer.

DATES: Effective January 13, 1998.

The incorporation by reference of

certain publications listed in the

regulations is approved by the Director

of the Federal Register as of January 13,

1998.

Comments for inclusion in the Rules

Docket must be received on or before

February 27, 1998.

ADDRESSES: Submit comments in

triplicate to the Federal Aviation

Administration (FAA), Transport

Airplane Directorate, ANM–114,

Attention: Rules Docket No. 97–NM–

294–AD, 1601 Lind Avenue, SW.,

Renton, Washington 98055–4056.

The service information referenced in

this AD may be obtained from Boeing

Commercial Airplane Group, P.O. Box

3707, Seattle, Washington 98124–2207.

This information may be examined at

the FAA, Transport Airplane

Directorate, 1601 Lind Avenue, SW.,

Renton, Washington; or at the Office of

the Federal Register, 800 North Capitol

Street, NW., suite 700, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Bob

Breneman, Aerospace Engineer,

Airframe Branch, ANM–120S, FAA,

Seattle Aircraft Certification Office,

1601 Lind Avenue, SW., Renton,

Washington; telephone (425) 227–2776;

fax (425) 227–1181.

SUPPLEMENTARY INFORMATION: The FAA

has received three reports indicating

that fatigue cracking was found on the

longeron splice fittings at stringer 11 on

Boeing Model 747SR and 747–200 series

airplanes. The most recent cracking was

detected on an airplane that had

accumulated 62,783 total flight hours

and 16,867 total flight cycles. Such

fatigue cracking, if not detected and

corrected in a timely manner, could

result in reduced controllability of the

horizontal stabilizer.

Explanation of Relevant Service

Information

The FAA has reviewed and approved

Boeing Alert Service Bulletin 747–

53A2410, Revision 2, dated October 30,

1997, including Addendum, which

describes procedures for repetitive

detailed inspections to detect cracking

of the longeron splice fittings at stringer

11, on the left and right sides at body

station 2598, and replacement of any

cracked fitting with a new fitting. The

alert service bulletin specifies various

compliance times for groups of

airplanes having different flight hour

and flight cycle thresholds.

Explanation of the Requirements of the

Rule

Since an unsafe condition has been

identified that is likely to exist or

develop on other Boeing Model 747–

100, 747–200, 747–300, 747SR, and

747SP series airplanes of the same type

design, this AD requires a one-time

detailed inspection to detect cracking of

the longeron splice fittings at stringer

11, on the left and right sides at body

station 2598, and replacement of any

cracked fitting with a new fitting. The

actions are required to be accomplished

in accordance with the alert service

bulletin described previously.

Differences Between the AD and the

Alert Service Bulletin

The AD differs from the previously

described alert service bulletin in that

the AD requires a one-time inspection

and shortened compliance time, rather

than the repetitive inspections and

multiple compliance times specified in

the referenced alert service bulletin. The

recent report of cracking detected on a

Boeing Model 747–200 series airplane at

a relatively low threshold has indicated

the need for interim action requiring

inspection at an early date, directed to

those airplanes that have accumulated

the highest number of flight hours or

flight cycles (i.e., 78,000 total flight

hours or 22,000 total flight cycles).

In addition, the AD differs from the

alert service bulletin by providing a

compliance period in terms of calendar

time, rather than flight cycles/hours, for

those airplanes that have exceeded the

threshold. Due to the limited

availability of replacement fittings, a 90-

day compliance period is provided by

this AD. This compliance period will

allow the operators of affected airplanes

an opportunity to schedule the

inspection and have necessary

replacement fittings available if cracks

are found during the inspection.

Interim Action

This AD is considered to be interim

action. The FAA is considering separate

rulemaking action that would propose

similar inspections at repetitive

intervals for all airplanes affected by the

previously described alert service

bulletin.