[Federal Register Volume 65, Number 77 (Thursday, April 20, 2000)]
[Rules and Regulations]
[Pages 21131-21132]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-9854]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 707


Truth in Savings

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: NCUA is amending its regulations that implement the Truth in 
Savings Act (TISA). This final rule allows credit unions to deliver 
periodic statement disclosures required by NCUA's regulations in 
electronic form if the member agrees to this form of delivery.

DATES: This rule is effective May 22, 2000.

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

FOR FURTHER INFORMATION CONTACT: Frank S. Kressman, Staff Attorney, 
Division of Operations, Office of General Counsel, at the above address 
or telephone: (703) 518-6540.

SUPPLEMENTARY INFORMATION

A. Background

    Part 707 of NCUA's regulations implements TISA. 12 CFR part 707. 
The purpose of part 707 and TISA is to assist members in making 
meaningful comparisons among accounts offered by credit unions and 
other financial institutions. Part 707 and TISA require, among other 
things, disclosure of yields, fees and other terms concerning share 
accounts to members at account opening, upon request, when changes in 
terms occur and in periodic statements. Many of these disclosures must 
be written. Many laws requiring that information be in writing consider 
information in electronic form to be written. Information produced, 
stored, or communicated by computer is also generally considered to be 
a writing, where visual text is involved.
    The Board of Governors of the Federal Reserve System (Federal 
Reserve) issued an interim rule amending its Regulation DD, which 
implements TISA. That rule allows depository institutions to deliver 
periodic statement disclosures required by Regulation DD in electronic 
form if the consumer agrees to that form of delivery. 64 FR 49846 
(September 14, 1999). In doing so, the Federal Reserve stated that 
electronic delivery of these kinds of disclosures will reduce paperwork 
and costs for institutions and may benefit consumers by allowing them 
to receive their periodic account statements, including required

[[Page 21132]]

disclosures, more quickly and in a more convenient form.
    The Federal Reserve's interim rule permits depository institutions 
to deliver periodic statement disclosures electronically if the 
consumer agrees to this method of delivery, but does not specifically 
discuss what constitutes a valid agreement between the consumer and 
depository institution. The Federal Reserve has stated that whether the 
parties have an agreement is to be determined by state law. It has also 
stated that consumers should be clearly informed when they consent to 
electronic delivery of periodic statements and disclosures. The Federal 
Reserve has further stated that the periodic statement must be provided 
in a form that can be displayed as visual text and must be clear and 
conspicuous and in a form that the consumer can retain.
    The Federal Reserve's interim rule applies only to periodic 
statement disclosures. Other disclosures required by TISA and 
Regulation DD may not be delivered in electronic form, however, the 
Federal Reserve has issued a proposal addressing electronic delivery of 
these other disclosures. 64 FR 49740 (September 14, 1999). Because TISA 
requires NCUA to issue rules substantially similar to those issued by 
the Federal Reserve, NCUA will continue to follow the development of 
the Federal Reserve's regulation in this area. As in the past, when the 
Federal Reserve has issued a final or interim final rule, the NCUA will 
act to issue a substantially similar rule for credit unions.
    TISA requires NCUA to promulgate regulations substantially similar 
to those promulgated by the Federal Reserve. 12 U.S.C. 4311(b). In 
doing so, NCUA is to take into account the unique nature of credit 
unions and the limitations under which they may pay dividends on member 
accounts. In compliance with TISA, NCUA issued an interim final rule 
with request for comments in November 1999 that is substantially 
similar to the above rule issued by the Federal Reserve. 64 FR 66355 
(November 26, 1999).

B. Comments

    The NCUA Board received eight comment letters regarding the interim 
final rule: four from credit union trade associations; two from federal 
credit unions; one from a state credit union; and one from an 
association of state credit union supervisors. The commenters 
unanimously supported the interim rule.
    Three commenters, however, suggested the rule provide additional 
clarification with respect to the agreement between a credit union and 
its member that permits electronic delivery of periodic statement 
disclosures. Specifically, they wanted guidance on what constitutes a 
valid agreement and how a member's consent may be obtained. As 
articulated by the Federal Reserve, the rule purposefully does not 
define what constitutes a valid agreement or dictate a method of 
obtaining a member's consent. This is to provide maximum flexibility to 
credit unions and their members. Whether the parties have a valid 
agreement is appropriately determined by state law.
    Two commenters suggested that a credit union should be permitted to 
deliver electronic periodic statement disclosures to an e-mail address 
designated by the member or to an area on a website accessible to the 
member. NCUA intends for credit unions to have flexibility in how they 
deliver these electronic disclosures. Both of these methods, among 
others, are permissible under the rule.

C. Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact agency rulemaking may have 
on a substantial number of small credit unions. For purposes of this 
analysis, credit unions under $1 million in assets are considered small 
credit unions. As of June 30, 1999, there were 1,690 small credit 
unions with a total of $807.3 million in assets, having an average size 
of $0.5 million. Small credit unions make up 15.6% of all credit 
unions, but only 0.2% of all credit union assets.
    This final rule provides credit unions with an optional and 
alternative method of delivering certain required disclosures. Credit 
unions are free to choose not to utilize this alternative. Credit 
unions that choose to use this alternative will likely realize a 
reduction in their costs of delivery as a result. The NCUA has 
determined and certifies that this final rule will not have a 
significant economic impact on a substantial number of small credit 
unions.

Paperwork Reduction Act

    NCUA has determined that these amendments to part 707 do not 
increase paperwork requirements under the Paperwork Reduction Act of 
1995 and regulations of the Office of Management and Budget.

Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their regulatory 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. This rule will apply to 
all federally-insured credit unions, but it will not have 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 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.

Assessment of Federal Regulations and Policies on Families

    NCUA has determined that this rule will not affect family well-
being within the meaning of Section 654 of the Treasury and General 
Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 
(1998).

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(Pub. L. 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 
Procedure Act. 5 U.S.C. 551. The Office of Management and Budget has 
determined that this rule is not a major rule for purposes of the Small 
Business Regulatory Enforcement Fairness Act of 1996.

List of Subjects in 12 CFR Part 707

    Advertising, Consumer protection, Credit unions, Reporting and 
recordkeeping requirements, Truth in savings.

    By the National Credit Union Administration Board on April 13, 
2000.
Becky Baker,
Secretary of the Board.

PART 707--TRUTH IN SAVINGS

    Accordingly, the interim final rule amending 12 CFR part 707, which 
was published at 64 FR 66355 on November 26, 1999, is adopted as a 
final rule without change.

[FR Doc. 00-9854 Filed 4-19-00; 8:45 am]
BILLING CODE 7535-01-U