Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / Rules and Regulations 9347 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 740 

RIN 3133–AD52 

Accuracy of Advertising and Notice of 

Insured Status 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Final rule. 

SUMMARY: Section 740.4 of NCUA’s rules 

requires that a federally insured credit 

union continuously display the official 

NCUA sign at every teller station or 

window where insured funds or 

deposits are normally received. Section 

740.4(c) requires that tellers accepting 

share deposits for both federally insured 

credit unions and nonfederally insured 

credit unions also post a second sign 

adjacent to the official NCUA sign. The 

current rule requires this second sign to 

list each federally insured credit union 

served by the teller along with a 

statement that only these credit unions 

are federally insured. Due to the 

evolution of shared branch networks it 

is now difficult for some tellers to 

comply with this second signage 

requirement and, accordingly, NCUA is 

revising the rule to replace the required 

listing of credit unions with a statement 

that not all of the credit unions served 

by the teller are federally insured and 

that members should contact their credit 

union if they need more information. 

DATES: This rule is effective April 3, 

2009. 

FOR FURTHER INFORMATION CONTACT: 

Elizabeth Wirick, Staff Attorney, Office 

of General Counsel, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314–3428 

or telephone: (703) 518–6540. 

SUPPLEMENTARY INFORMATION: 

A. Background 

NCUA proposed revisions to part 740 

of its regulations, addressing the notice 

and advertising requirements applicable 

to credit unions insured by the National 

Credit Union Share Insurance Fund 

(NCUSIF) administered by NCUA, in 

October 2008. 73 FR 2935 (Oct. 22, 

2008). Section 740.4(a) requires 

federally insured credit unions to post 

a sign at all teller stations that normally 

receive deposits. This official NCUA 

sign reads: ‘‘Your savings federally 

insured to at least $100,000 and backed 

by the full faith and credit of the United 

States Government’’ accompanied by 

the acronym ‘‘NCUA’’ and the words 

‘‘National Credit Union Administration, 

a U.S. Government Agency.’’ 12 CFR 

740.4(a). The official NCUA sign 

informs and reassures members that 

their share deposits are guaranteed, to 

certain limits, by the U.S. Government 

in the event the credit union fails. 

Section 740.4(c) imposes additional 

requirements on federally insured credit 

unions participating in shared branch 

networks. Generally, federally insured 

credit unions are prohibited from 

accepting funds at teller stations or 

windows where nonfederally insured 

credit unions also receive deposits. 12 

CFR 740.4(c). Tellers in ‘‘credit union 

centers, service centers, or branches 

servicing more than one credit union’’ 

(i.e., shared branching networks) are 

currently exempted from this 

prohibition, but only if they display a 

specific sign at each station or window 

above or beside the official NCUA sign. 

Id. This second sign must state that 

‘‘[o]nly the following credit unions 

serviced by this facility are federally 

insured by the NCUA,’’ followed by the 

full name of each federally insured 

credit union displayed in lettering ‘‘of 

such size and print to be clearly legible 

to all members conducting share or 

share deposit transactions.’’ Id. 

As discussed in the proposal, the 

present rule has several shortcomings. 

For example, the current size of shared 

branching networks makes compliance 

with this section nearly impossible as 

an extremely large sign would be 

required to list the hundreds of federally 

insured credit unions participating in 

the largest shared branching networks, 

and it is difficult to keep the sign upto-date as federally insured credit 

unions frequently join or leave these 

networks. 73 FR 62935, 62936 (Oct. 22, 

2008). Additionally, shared branching 

activities increasingly take place in the 

branches of particular credit unions 

rather than at stand-alone sites operated 

by third parties such as credit union 

service organizations. Id. The current 

rule prescribes the same sign for shared 

branch locations that are credit union 

facilities as for locations operated by 

third parties. Finally, the current rule 

does not address signage requirements 

for branches of nonfederally insured 

credit unions participating in shared 

branching networks and accepting 

deposits for federally insured credit 

unions. Id. 

The proposed revisions to § 740.4(c) 

retained the general prohibition on 

federally insured credit unions 

receiving funds at any teller station or 

window where any nonfederally 

insured credit union also receives 

account funds, but set forth three 

exceptions to this prohibition. The first 

two exceptions permit tellers at 

federally insured credit unions and 

shared branches operated by non-credit 

union entities to receive deposits for 

nonfederally insured credit unions if 

these tellers post a second sign adjacent 

to the official NCUA sign. Under the 

proposal, the language for the second 

sign for tellers at federally insured 

credit unions reads as follows: 

This credit union participates in a shared 

branch network with other credit unions and 

accepts share deposits for members of those 

other credit unions. Not all of these other 

credit unions are federally insured. If you 

need information on the insurance status of 

your credit union, please contact your credit 

union directly. 

The second sign for tellers at shared 

branches operated by non-credit union 

entities is as follows: 

This facility accepts share deposits for 

multiple credit unions. Not all of these credit 

unions are federally insured. If you need 

information on the insurance status of your 

credit union, please contact your credit 

union directly. 

The third exception to the general 

prohibition addresses signage 

requirements at nonfederally insured 

credit unions. The proposal clarified 

that tellers in nonfederally insured 

credit unions may accept deposits for 

federally insured credit unions as part 

of a shared branch network. The 

proposal, however, prohibited a 

nonfederally insured credit union from 

displaying the official NCUA sign, as 

this could be very confusing to the 

members of the nonfederally insured 

credit union. Also, since the credit 

union will not display the official sign, 

there is no need for it to display the 

second sign. 

As discussed below, NCUA is 

adopting the rule as proposed with a 

slight revision to the second sign for 

shared branch locations at federally 

insured credit unions. 

B. Comments and Final Rule 

NCUA received sixteen comments on 

the proposal. All commenters generally 

agreed the current rule is difficult to 

comply with and not particularly useful 

to credit union members. Most 

commenters supported the revisions as 

proposed by NCUA or with minor 

changes. A few commenters opposed 

any requirement for a second sign and 

recommended NCUA repeal the 

requirement. 

Three commenters who generally 

supported the proposal suggested the 

second sign should only be required at 

one, central location instead of next to 

every official insurance sign. NCUA has 

not adopted this suggestion in the final 

rule because members could be misled 

about the insurance status of their credit 

union if the second sign required by 

9348 Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / Rules and Regulations 

§ 740.4(c) is not adjacent to every 

official insurance sign. Similarly, NCUA 

did not adopt the suggestion of another 

commenter who requested that federally 

insured credit unions have the option to 

distribute a paper notice to ‘‘guest’’ 

members using the federally insured 

credit union as a shared branch instead 

of posting the second signs. One 

problem with this suggestion is that 

members are more likely to miss this 

notice if it is presented on a separate 

flyer at the entrance or accompanies the 

member’s transaction information 

distributed by a teller. Another problem 

with this suggestion is that tellers may 

fail to distribute the notice to all guests, 

and it would be difficult for NCUA to 

assess compliance with this 

requirement. In contrast, the short, clear 

second sign gives members the 

information they need in a format they 

are most likely to notice and absorb. The 

straightforward requirement for a 

second sign also makes compliance with 

the regulation and assessing compliance 

with the regulation easier than would 

allowing a separate disclosure to guest 

members. 

Another commenter suggested that it 

would be more useful for the second 

sign to list the nonfederally insured 

credit unions participating in the shared 

branching network. This commenter 

stated that since the vast majority of 

credit unions are federally insured, a 

second sign listing the names of the 

nonfederally insured credit unions 

would be much shorter and give 

members exactly the information they 

need without the extra step of 

contacting their credit union. NCUA 

agrees this option would reduce the 

regulatory burden on credit unions and 

in theory could provide more complete 

information for credit union members. 

NCUA has not adopted this suggestion, 

however, because of concern that 

members of nonfederally insured credit 

unions would see the name of their 

nonfederally insured credit union on a 

sign immediately adjacent to the official 

NCUA insurance sign and could, if they 

did not read the sign very carefully, 

erroneously conclude their credit union 

was federally insured. 

Two commenters requested NCUA 

add a phrase to the second sign required 

by § 740.4(c) for tellers at federally 

insured credit unions reiterating the 

credit union is federally insured, and 

NCUA has adopted this change in the 

final rule. The second sign for tellers in 

federally insured credit unions is 

amended to read as follows: 

This credit union participates in a shared 

branch network with other credit unions and 

accepts share deposits for members of those 

other credit unions. While this credit union 

is federally insured, not all of these other 

credit unions are federally insured. If you 

need information on the insurance status of 

your credit union, please contact your credit 

union directly. 

Like the commenters requesting this 

change, NCUA has observed an 

increasing focus on deposit insurance 

coverage among credit union members 

as turbulence in the financial 

marketplace continues. Although NCUA 

believes very few members would be 

confused by the second sign as 

proposed since it would be posted 

adjacent to the official insurance sign, 

NCUA agrees the suggested clarification 

is useful and adopts it in the final rule. 

Finally, one commenter opined that 

the proposal would permit federally 

insured credit unions flexibility to draft 

slightly differing language for the 

second sign required by § 704.4(c). This 

is not true. While the design, color, and 

font of the second sign may depart from 

NCUA’s template, the language must 

conform to the regulation exactly. 

As discussed in the proposal, the 

second sign required by § 740.4(c) must 

be conspicuous and be similar to the 

official NCUA sign in terms of design, 

color, and font. NCUA will produce 

signs that meet this requirement and 

make the signs available for purchase at 

a reasonable cost. Credit unions may 

either use the NCUA-produced sign or 

produce their own sign, as long as the 

sign meets the requirements of the rule. 

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 will not impose any 

regulatory burden and in fact will ease 

existing compliance burdens on 

federally insured credit unions 

participating in shared branch networks 

and accepting deposits for both 

federally insured and nonfederally 

insured credit unions. The Board 

certifies that this rule will not have a 

significant economic impact on a 

substantial number of small credit 

unions, and, therefore, a regulatory 

flexibility analysis is not required. 

Small Business Regulatory Enforcement 

Act 

The Small Business Regulatory 

Enforcement Fairness Act (SBREFA) of 

1996, Public Law 104–121, provides 

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 Administrative Procedures 

Act. 5 U.S.C. 551. NCUA does not 

believe this rule is a major rule for 

purposes of SBREFA. 

Paperwork Reduction Act 

NCUA has determined that the rule 

will 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 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 

rule will not affect family well-being 

within the meaning of § 654 of the 

Treasury and General Government 

Appropriations Act, 1999, Public Law 

105–277, 112 Stat. 2681 (1998). 

List of Subjects in 12 CFR Part 740 

Advertisements, Credit unions, Signs 

and symbols. 

By the National Credit Union 

Administration Board on February 26, 2009. 

Mary F. Rupp, 

Secretary of the Board. 

■ For the reasons set forth above, NCUA 

amends 12 CFR part 740 as follows. 

PART 740—ACCURACY OF 

ADVERTISING AND NOTICE OF 

INSURED STATUS 

■ 1. The authority citation for part 740 

continues to read as follows: 

Authority: 12 U.S.C. 1766, 1781, 1785, and 

1789. 

■ 2. Amend § 740.1 by revising 

paragraph (b), and adding paragraph (c), 

to read as follows: 

Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / Rules and Regulations 9349 

1Public Law 104–134, 31001(s), 110 Stat. 1321– 

373, (Apr. 26, 1996). The provision is codified at 

28 U.S.C. 2461 note. 

2Public Law 101–410, 104 Stat. 890, (Oct. 5, 

1990), also codified at 28 U.S.C. 2461 note. 

3The CPI–U is published by the Department of 

Labor, Bureau of Labor Statistics, and is available 

at its Web site: http://www.bls.gov/cpi/. 

§ 740.1 Definitions. 

* * * * * 

(b) Insured credit union and federally 

insured credit union as used in this part 

mean a credit union with National 

Credit Union Administration share 

insurance. 

(c) Nonfederally insured credit union 

as used in this part means a credit union 

with either no account insurance or 

with primary account insurance 

provided by some entity other than the 

National Credit Union Administration. 

■ 3. Amend § 740.4 by revising 

paragraph (c) to read as follows: 

§ 740.4 Requirements for the official sign. 

* * * * * 

(c) To avoid any member confusion 

from the use of the official NCUA sign, 

federally insured credit unions are 

prohibited from receiving account funds 

at any teller station or window where 

any nonfederally insured credit union 

also receives account funds. As 

exceptions to this prohibition: 

(1) A teller in a branch of a federally 

insured credit union may accept 

account funds for nonfederally insured 

credit unions, but only if the teller 

displays a conspicuous sign next to the 

official sign that states ‘‘This credit 

union participates in a shared branch 

network with other credit unions and 

accepts share deposits for members of 

those other credit unions. While this 

credit union is federally insured, not all 

of these other credit unions are federally 

insured. If you need information on the 

insurance status of your credit union, 

please contact your credit union 

directly.’’ This sign must be similar to 

the official sign in terms of design, 

color, and font. 

(2) A teller in a facility operated by a 

non-credit union entity may accept 

account funds for both federally insured 

credit unions and nonfederally insured 

credit unions, but only if the teller 

displays a conspicuous sign next to the 

official sign stating ‘‘This facility 

accepts share deposits for multiple 

credit unions. Not all of these credit 

unions are federally insured. If you need 

information on the insurance status of 

your credit union, please contact your 

credit union directly.’’ This sign must 

be similar to the official sign in terms of 

design, color, and font. 

(3) A teller in a branch of a 

nonfederally insured credit union may 

accept account funds for federally 

insured credit unions. No teller in a 

nonfederally insured credit union may 

display the official NCUA sign. 

* * * * * 

[FR Doc. E9–4600 Filed 3–3–09; 8:45 am] 

BILLING CODE 7535–01–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 747 

Civil Monetary Penalty Inflation 

Adjustment 

AGENCY: National Credit Union 

Administration. 

ACTION: Final rule. 

SUMMARY: The National Credit Union 

Administration (NCUA) is amending its 

rules of practice and procedure to adjust 

the maximum amount of each civil 

money penalty (CMP) within its 

jurisdiction to account for inflation. 

This action, including the amount of the 

adjustment, is required under the 

Federal Civil Penalties Inflation 

Adjustment Act of 1990, as amended by 

the Debt Collection Improvement Act of 

1996. 

DATES: Effective Date: March 4, 2009. 

FOR FURTHER INFORMATION CONTACT: John 

K. Ianno, Associate General Counsel, or 

Jon Canerday, Trial Attorney, Office of 

General Counsel, NCUA, 1775 Duke 

Street, Alexandria, Virginia 22314, or 

telephone (703) 518–6540. 

SUPPLEMENTARY INFORMATION: 

A. Background 

The Debt Collection Improvement Act 

of 1996 1 (DCIA) amended the Federal 

Civil Penalties Inflation Adjustment Act 

of 1990 2 (FCPIA Act) to require every 

Federal agency to enact regulations that 

adjust each civil monetary penalty 

(CMP) provided by law under its 

jurisdiction by the rate of inflation at 

least once every 4 years. These periodic 

adjustments are to be calculated 

pursuant to the inflation adjustment 

formula in section 5(b) of the FCPIA 

Act. Section 6 of the FCPIA Act 

specifies that inflation-adjusted CMPs 

will only apply to violations that occur 

after the effective date of the 

adjustment. 

The inflation adjustment is based on 

the percentage increase in the Consumer 

Price Index for all urban consumers 

(CPI–U) published by the Department of 

Labor.3 Specifically, section 5(b) of the 

FCPIA Act defines the term ‘‘cost-ofliving adjustment’’ as ‘‘the percentage (if 

any) for each civil monetary penalty by 

which—(1) the Consumer Price Index 

for the month of June of the calendar 

year preceding the adjustment, exceeds 

(2) the Consumer Price Index for the 

month of June of the calendar year in 

which the amount of such civil 

monetary penalty was last set or 

adjusted pursuant to law.’’ The amount 

of each inflation adjustment must then 

be rounded to a number prescribed by 

section 5(a) of the FCPIA Act. 

B. Mathematical Calculations of the 

Adjustments 

NCUA last adjusted the CMPs it is 

authorized to impose in 2004. 69 FR 

60080. Accordingly, the current 

adjustment of these CMPs will be the 

percentage by which the CPI–U for the 

month of June 2007 exceeds the CPI–U 

for the month of June 2004. According 

to the Bureau of Labor Statistics, the 

CPI–U for the month of June 2004 was 

189.7 and the CPI–U for the month of 

June 2007 was 208.352. The percentage 

by which the 2007 figure exceeds the 

2004 figure is 9.8 percent. Thus, the 

CMPs should be multiplied by 9.8 

percent, the resulting dollar amount 

rounded up or down according to the 

rounding requirements of the FCPIA 

Act, and then that amount added to the 

current penalty. In some cases, the 

rounding rules resulted in no 

adjustment to the amount of the CMP. 

In previous years, the Board has 

explained in detail the adjustment 

procedure for each of the CMPs under 

its jurisdiction. Detailed explanations 

were provided because some CMPs were 

adjusted for the first time, requiring the 

use of different formulas. In view of the 

fact that all of the CMPs were last 

adjusted in 2004, such detailed 

explanations are no longer necessary. 

For that reason, and to be consistent 

with the other banking agencies, the 

Board will show the adjustments in 

table format. The following table shows 

both the present CMPs, the adjustment 

methodology, and the CMPs after being 

adjusted for inflation. The table 

published in 12 CFR 747.1001 shows 

only the adjusted CMPs, not the 

calculations.