Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Rules and Regulations 21131

with the executive order. This rule will

apply to all federally-insured credit

unions offering secondary capital

accounts pursuant to § 701.34, but it

will not have substantial direct effects

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

APA. 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 701

Credit unions, Reporting and

recordkeeping requirements.

By the National Credit Union

Administration Board on April 13, 2000.

Becky Baker,

Secretary of the Board.

For the reasons set forth above, 12

CFR part 701 is amended as follows:

PART 701—ORGANIZATION AND

OPERATIONS OF FEDERAL CREDIT

UNIONS

1. The authority citation for part 701

continues to read as follows:

Authority: 12 U.S.C. 1752(5), 1755, 1756,

1757, 1759, 1761a, 1761b, 1766, 1767, 1782,

1784, 1787, and 1789. Section 701.6 is also

authorized by 31 U.S.C. 3717. Section 701.31

is also authorized by 15 U.S.C. 1601 et seq.,

42 U.S.C. 1861 and 42 U.S.C. 3601–3610.

Section 701.35 is also authorized by 42

U.S.C. 4311–4312.

2. Section 701.34 is amended by

adding paragraphs (b)(12) and (b)(13) to

read as follows:

§ 701.34 Designation of low-income

status; receipt of secondary capital

accounts by low-income designated credit

unions.

* * * * *

(b) * * *

(12) As provided in § 702.204(b)(11)

of this chapter, 60 days after the

effective date of a credit union being

classified as ‘‘critically

undercapitalized’’ under NCUA’s

prompt corrective action rules, the

NCUA Board may prohibit payments of

principal, dividends or interest on the

credit union’s uninsured secondary

capital accounts established after

August 7, 2000, except that unpaid

dividends or interest shall continue to

accrue under the terms of the account to

the extent permitted by law.

(13) As provided in §§ 702.304(b) and

702.305(b) of this chapter, the NCUA

Board may prohibit payments of

principal, dividends or interest on the

uninsured secondary capital accounts

established after August 7, 2000 of a

‘‘moderately capitalized’’, ‘‘marginally

capitalized’’, ‘‘minimally capitalized’’ or

‘‘uncapitalized’’ credit union if the

credit union’s net worth ratio has not

increased consistent with its thenpresent business plan, or the credit

union has failed to undertake any

mandatory supervisory action

prescribed in §§ 702.304(a) or 702.305(a)

of this chapter. If NCUA takes this

action, unpaid dividends or interest

shall continue to accrue under the terms

of the account to the extent permitted by

law.

* * * * *

3. The Appendix to § 701.34 is

amended by adding a paragraph to

immediately precede the signature line

to read as follows:

Appendix to § 701.34 [Amended]

* * * * *

• The NCUA may prohibit payments of

principal, dividends or interest on llll

(name of credit union) uninsured secondary

capital accounts established after August 7,

2000, if llll (name of credit union) has

been in operation less than 10 years and has

$10 million or less in assets and the

provisions of § 701.34(b)(13) of NCUA’s

regulations are met, or, if llll (name of

credit union) has been in operation for 10

years or more or has more than $10 million

in assets and the provisions of § 701.34(b)(12)

of NCUA’s regulations are met.

* * * * *

[FR Doc. 00–9855 Filed 4–19–00; 8:45 am]

BILLING CODE 7535–01–P

NATIONAL CREDIT UNION

ADMINISTRATION

12 CFR Part 707

Truth in Savings

AGENCY: National Credit Union

Administration (NCUA).

ACTION: Final rule.

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

21132 Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Rules and Regulations

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