[Federal Register Volume 85, Number 169 (Monday, August 31, 2020)]
[Proposed Rules]
[Pages 53708-53713]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16981]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
RIN 3133-AF24
Fees Paid by Federal Credit Unions
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
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SUMMARY: The NCUA Board (Board) proposes to amend its regulation
governing assessment of an annual operating fee to federal credit
unions (FCUs). First, for purposes of calculating the annual operating
fee, the proposed rule would amend the current rule to exclude from
total assets any loan an FCU reports under the Small Business
Administration's Paycheck Protection Program (PPP) or similar future
programs approved for exclusion by the NCUA Board. Second, the proposed
rule would delete from the current regulation references to the Credit
Union System Investment Program and the Credit Union Homeowners
Affordability Relief Program, both of which no longer exist. Third, the
proposed rule would amend the period used for the calculation of an
FCU's total assets. Currently, total assets are calculated using the
FCU's December 31st Call Report of the preceding year. Under the
proposed rule, total assets would be calculated as the average total
assets reported on the FCU's previous four Call Reports available at
the time the NCUA Board approves the agency's budget for the upcoming
year, adjusted for any excludable programs as determined by the Board.
Finally, the proposed rule also would make some minor technical
changes.
The Board has separately published a document and requested public
comment about the methodologies it uses for computing the Overhead
Transfer Rate and setting the annual operating fee schedule for fees
charged to FCUs. Members of the public are encouraged to comment about
these methodologies by responding to the appropriate Federal Register
document.
[[Page 53709]]
The notice relating to National Credit Union Administration Overhead
Transfer Rate Methodology and Operating Fee Schedule Methodology is
published elsewhere in this issue of the Federal Register.
DATES: Comments must be received on or before October 30, 2020.
ADDRESSES: You may submit written comments, identified by RIN 3133-
AF24, by any of the following methods (Please send comments by one
method only):
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Fax: (703) 518-6319. Include ``[Your Name]--Comments on
Proposed Rule: Fees Paid by Federal Credit Unions'' in the transmittal.
Mail: Address to Gerard S. Poliquin, Secretary of the
Board, National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
Public Inspection: You may view all public comments on the Federal
eRulemaking Portal at http://www.regulations.gov as submitted, except
for those we cannot post for technical reasons. The NCUA will not edit
or remove any identifying or contact information from the public
comments submitted. Due to social distancing measures in effect, the
usual opportunity to inspect paper copies of comments in the NCUA's law
library is not currently available. After social distancing measures
are relaxed, visitors may make an appointment to review paper copies by
calling (703) 518-6540 or emailing OGCMail@ncua.gov.
FOR FURTHER INFORMATION CONTACT: James Holm, Supervisory Budget
Analyst, Office of the Chief Financial Officer, at (703) 518-6570;
Kevin Tuininga, Associate General Counsel, or John H. Brolin, Senior
Staff Attorney, Office of General Counsel, at (703) 518-6540; or by
mail at 1775 Duke Street, Alexandria, VA 22314.
SUPPLEMENTARY INFORMATION:
I. Background
II. Legal Authority
III. Summary of the Proposed Rule
IV. Regulatory Procedures
I. Background
A. The NCUA Annual Budget and Fees Paid by FCUs
The NCUA charters, regulates, and insures deposits in FCUs and
insures deposits in state-chartered credit unions that have their
shares insured through the National Credit Union Share Insurance Fund
(Share Insurance Fund). To cover expenses related to the NCUA's tasks,
the Board adopts an annual budget in the fall of each year. The Federal
Credit Union Act (FCU Act) provides two primary sources to fund the
budget: (1) Requisitions from the Share Insurance Fund; \1\ and (2)
operating fees charged against FCUs.\2\ The Board uses an allocation
formula, the Overhead Transfer Rate (OTR), to determine the amount of
the budget that it will requisition from the Share Insurance Fund.\3\
Remaining amounts needed to fund the annual budget are charged to FCUs
in the form of operating fees, based on each FCU's total assets.\4\
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\1\ See, e.g., 12 U.S.C. 1783(a) (making the Share Insurance
Fund available ``for such administrative and other expenses incurred
in carrying out the purpose of [Subchapter II of the FCU Act] as
[the Board] may determine to be proper.'').
\2\ 12 U.S.C. 1755(a) (``In accordance with rules prescribed by
the Board, each Federal credit union shall pay to the Administration
an annual operating fee which may be composed of one or more charges
identified as to the function or functions for which assessed.'').
\3\ See, e.g., Request for Comment Regarding Revised Overhead
Transfer Rate Methodology, 82 FR 29935 (June 30, 2017).
\4\ 12 CFR 701.6(a).
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The FCU Act requires each FCU to, ``in accordance with rules
prescribed by the Board [. . .] pay to the [NCUA] an annual operating
fee which may be composed of one or more charges identified as to the
function or functions for which assessed.'' \5\ The fee must ``be
determined according to a schedule, or schedules, or other method
determined by the Board to be appropriate, which gives due
consideration to the expenses of the [NCUA] in carrying out its
responsibilities under the [FCU Act] and to the ability of [FCUs] to
pay the fee.'' \6\ The statute requires the Board to, among other
things, ``determine the periods for which the fee shall be assessed and
the date or dates for the payment of the fee or increments thereof.''
\7\
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\5\ 12 U.S.C. 1755(a).
\6\ 12 U.S.C. 1755(b).
\7\ Id.
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Section 701.6 of the NCUA's regulations governs operating fee
processes.\8\ The regulation establishes the following: (i) The basis
for charging operating fees (i.e., total assets of the FCU, with
certain exclusions, as of December 31st of the preceding year); (ii)
the notice the NCUA must provide to FCUs regarding the fees; (iii)
coverage provisions providing certain exceptions for new FCU charters,
conversions, mergers, and liquidations; and (iv) the assessment of
administrative fees and interest for late payment, among other
principles and processes.\9\ Certain aspects of and adjustments to the
operating fee process, such as the multipliers used to determine fees
applicable to designated asset tiers, are not included in the NCUA's
regulations. Instead, the Board generally adopts an operating fee
schedule at an open meeting each year and publishes the schedule in the
agency's annual budget and on its website.\10\
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\8\ 12 CFR 701.6.
\9\ Id.
\10\ In November 2015, the Board delegated authority to the
Chief Financial Officer to administer the Board-approved methodology
and to set the operating fees as calculated per the approved
methodology each annual budget cycle beginning with 2016. See Board
Action Memorandum on 2016 Operating Fee (Nov. 19, 2015), https://www.ncua.gov/About/Documents/Agenda%20Items/AG20151119Item6a.pdf.
Since that time, the operating fee schedule has been published in
the NCUA's annual budget. See 2020-2021 Budget Justification
(December 12, 2019), https://www.ncua.gov/files/agenda-items/AG20191212Item1b.pdf.
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Section 701.6(a) sets out the basis on which the NCUA assesses the
operating fee. Paragraph (a) provides that FCUs must pay the NCUA an
annual operating fee based on the credit union's total assets.\11\ The
NCUA calculates an FCU's operating fee by multiplying the dollar amount
of its total assets by a percentage set by the Board based on asset
tiers after considering the expenses of the NCUA and the ability of
FCUs to pay the fee. The term ``total assets'' for purposes of the
operating fee presently includes all assets, with certain exclusions,
reported on an FCU's Call Report as of December 31st of the previous
fiscal year.
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\11\ 12 CFR 701.6(a).
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Operating fee payments are due from FCUs in April each year, and
the NCUA prepares invoices using reported assets from the prior year's
December Call Report.\12\ In order to provide clarity to FCUs about
their operating fee charges for the upcoming year, the Board typically
approves the budget and sets the associated operating fee rates in
November of the year before the operating fee is billed. Because the
budget and operating fee rates are approved before December Call Report
data is available, the Chief Financial Officer uses projected FCU asset
growth to set the operating fee rates. Therefore, if actual total
assets reported in December Call Reports are below the projected asset
growth used for setting the operating fee rates, the NCUA will collect
less in operating fee revenue than it requires to fund the budget.
Conversely, if total assets reported in December Call Reports are
greater than projected growth, the NCUA may collect more than is
required.
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\12\ Id.
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[[Page 53710]]
B. The CARES Act and the SBA's Paycheck Protection Program
On March 27, 2020, President Trump signed the Coronavirus Aid,
Relief, and Economic Security Act, or CARES Act, into law.\13\ The law
is designed to provide aid to the U.S. economy in the midst of the
COVID-19 pandemic. The CARES Act authorized the Small Business
Administration (SBA) to create a loan guarantee program, the Paycheck
Protection Program (PPP), to help certain businesses affected by the
COVID-19 pandemic meet payroll needs (including employee salaries, sick
leave, other paid leave, and health insurance expenses), as well as
mortgage, rent, and utilities expenses. Provided credit union lenders
comply with the applicable lender obligations set forth in the SBA's
interim final rule, the SBA will fully guarantee loans issued under the
PPP, backed by the full faith and credit of the United States. Most
federally insured credit unions are eligible to make PPP loans to
members.\14\ Under the CARES Act, PPP loans must receive a zero percent
risk weighting for purposes of the NCUA's risk-based capital
requirements.\15\
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\13\ Public Law 116-136 (Mar. 27, 2020).
\14\ Credit unions that are currently permitted to make loans
under the SBA's 7(a) program are automatically approved to make PPP
loans. Federally insured credit unions that are not current SBA 7(a)
lenders can receive approval by submitting an application to the
SBA, unless they are currently designated as being in troubled
condition or are subject to a formal enforcement action that
addresses unsafe and unsound lending practices. Non-depository
financing providers, such as credit union service organizations, may
qualify as a PPP lender subject to the requirements listed in the
interim final rule.
\15\ Public Law 116-135 Sec. 1102(a)(2).
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Following enactment of the CARES Act, the Board issued an interim
final rule to make several amendments to the NCUA's regulations
relating to PPP loans.\16\ Of most relevance to this proposed rule, an
April 27, 2020, interim final rule provided that if a covered PPP loan
made by a federally insured credit union is pledged as collateral for a
non-recourse loan that is provided as part of the Board of Governors of
the Federal Reserve System's (FRB) PPP Liquidity Facility,\17\ the
covered loan can be excluded from a credit union's calculation of total
assets for the purposes of calculating its net worth ratio. The
exclusion of PPP loans pledged to the FRB's Liquidity Facility was
comparable to an interim final rule issued by the other banking
agencies with respect to their capital regulations,\18\ which is
consistent with the statutory requirement for the Board to prescribe a
system of prompt corrective action that is, among other things,
comparable to the section of the Federal Deposit Insurance Act that
established prompt corrective action requirements for banks.
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\16\ 85 FR 23212 (Apr. 27, 2020).
\17\ The program was named as both the PPP Lending Facility and
the PPP Liquidity Facility when the Board approved the interim final
rule. It is now named the PPP Liquidity Facility in FRB
documentation on the program.
\18\ 85 FR 20387 (Apr. 13, 2020).
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That change applied only to the calculation of the net worth ratio
and not to other requirements or calculations in the NCUA's regulations
that depend on a credit union's total assets. At present, an FCU must
report the value of all of its PPP loans in its Call Reports, whether
the FCU originated the loans, purchased them in the secondary market,
or has pledged them to the FRB Liquidity Facility.\19\ The value of PPP
loans reported in Call Reports could therefore increase the total asset
amounts the NCUA uses to compute the annual operating fees due. The
Board is concerned that without a change to the NCUA's current
operating fee regulation,\20\ an FCU's PPP loans may subject the FCU to
a higher operating fee, and this may impose a burden for participation
in this program, or a disincentive to participate now that the program
has been extended. As the PPP serves an important public purpose, the
Board believes PPP loans warrant exclusion from total assets when
determining operating fees to avoid these harms.
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\19\ See SBA Procedural Notice, Guidance on Whole Loan Sales of
Paycheck Protection Program Loans (May 1, 2020), available at
https://www.sba.gov/sites/default/files/2020-05/5000-20024.pdf.
\20\ 12 CFR 701.6(a).
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Under Sec. 1755 of the FCU Act, the Board considers, among other
things, FCUs' ability to pay assessments. The Board finds that an
increase in an FCU's assets based on PPP loans--regardless of whether
they are pledged to the PPP Liquidity Facility--poses no undue risk to
the credit union's capital strength. Additionally, given the short-term
and low-fee nature of PPP loans, FCUs that report increased total
assets as a result of them are unlikely to have a corresponding
increase in their ability to pay a higher assessment. Furthermore,
excluding PPP loans from operating fee assessments makes the program
more affordable to the participants and avoids imposing a burden based
on participation in a program designed to provide an important public
benefit. These benefits closely align with the mission of credit unions
to support their member communities through trusted and affordable
financial services. Accordingly, based on this statutory analysis and
application, this proposed rule has a broader scope of exclusion than
the Board's April 27, 2020, interim final rule on PPP loans.
In addition, due to the possibility of additional economic stimulus
through similar programs, the Board is proposing to incorporate a
general statement in the regulation that contemplates the Board's
exclusion of loans made under programs similar to the PPP from total
assets when calculating operating fees. This change would provide the
Board with flexibility to consider excluding assets related to future
programs that may develop on short notice, particularly in cases where
including such assets may create a disincentive for FCUs to
participate. In a separate Federal Register document, the Board is
requesting comment on the methodologies it uses to set the rate
schedule for operating fees and how it determines the OTR. Members of
the public are encouraged to comment about these methodologies by
responding to the appropriate Federal Register notice. The notice
relating to National Credit Union Administration Overhead Transfer Rate
Methodology and Operating Fee Schedule Methodology is published
elsewhere in this issue of the Federal Register.
II. Legal Authority
The Board is issuing this proposed rule pursuant to its authority
under the FCU Act.\21\ The FCU Act grants the Board a broad mandate to
issue regulations governing both FCUs and, more generally, all
federally insured credit unions. For example, section 120 of the FCU
Act is a general grant of regulatory authority and authorizes the Board
to prescribe rules and regulations for the administration of the FCU
Act.\22\ Section 105 of the FCU Act requires FCUs to pay an annual
operating fee to the NCUA.\23\ In particular, section 105(b) provides:
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\21\ 12 U.S.C. 1751 et seq.
\22\ 12 U.S.C. 1766(a).
\23\ 12 U.S.C. 1755(a).
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The fee assessed under this section shall be determined according
to a schedule, or schedules, or other method determined by the Board to
be appropriate, which gives due consideration to the expenses of the
Administration in carrying out its responsibilities under this chapter
and to the ability of Federal credit unions to pay the fee. The Board
shall, among other things, determine the periods for which the fee
shall be assessed and the
[[Page 53711]]
date or dates for the payment of the fee or increments thereof.\24\
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\24\ 12 U.S.C. 1755(b).
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Accordingly, the FCU Act provides the Board with broad discretion
to decide how the amount of the operating fee is determined.
III. Summary of the Proposed Rule
The proposed rule would amend Sec. 701.6(a) by excluding PPP loans
from the FCU's total assets for purposes of calculating its operating
fee. In particular, the proposal would amend current Sec. 701.6(a) to
provide, among other things, that the operating fee shall be based on
the total assets of each FCU, less loans made under the Small Business
Administration's Paycheck Protection Program.\25\ Under this proposed
rule, participating FCUs would continue to report their assets in the
quarterly Call Report. For purposes of determining the operating fee,
the NCUA will exclude reported PPP loans in the calculation of total
assets. The NCUA believes this change will ensure that FCUs interested
in making PPP loans do not bear greater financial burdens for doing so.
The Board proposes to exclude PPP loans from the calculation of total
assets even if the PPP loans are not pledged to the FRB PPP Liquidity
Facility because PPP loans pose no undue risk to the FCU's capital
strength and, due to their unique structure, do not increase an FCU's
ability to pay a higher operating fee. Excluding all reported PPP loans
when determining total assets also ensures FCUs that do not pledge
their PPP loans to the FRB are treated consistently with those FCUs
that do. Absent such consistent treatment, FCUs that do not pledge
their PPP loans to the FRB would bear a larger relative cost burden of
the operating fee compared to those FCUs that do pledge their PPP
loans.
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\25\ 15 U.S.C. 636(a)(36).
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Excluding PPP loans from the calculation of total assets is similar
to the amendment the Board made to the calculation of total assets in a
2009 final rule to encourage FCU participation in the Credit Union
System Investment Program (CU SIP) or the Credit Union Homeowners
Affordability Relief Program (CU HARP).\26\ Investments in these
programs were excluded from the computation of total assets because the
instruments were guaranteed by the Share Insurance Fund, posed no
credit risk to the participating credit unions, and the exclusion was
intended to encourage a greater participation rate in programs with a
clear public benefit. The CU SIP ended in 2010. Similarly, CU HARP
investments were issued by the U.S. Central Federal Credit Union and
all of those investments matured prior to that credit union's
liquidation in 2012. Because these programs no longer exist and have no
remaining investments, the Board proposes to amend current Sec.
701.6(a) to delete references to them. However, given the potential for
additional programs similar to the PPP to arise in the near future or
as a result of future economic crises, the Board proposes adding
regulatory language that would contemplate exclusion of assets under
similar programs without requiring references to the specific program
in the regulation. The Board anticipates making exclusions of similar
future programs by issuing an order, which may be published in a letter
to FCUs or a similar notice. The Board invites comment on this
approach.
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\26\ 74 FR 29934 (June 24, 2009).
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In addition, the Board is proposing to amend current Sec. 701.6(a)
to use the average of FCUs' four most-recently reported quarterly
assets to calculate operating fees and to make conforming amendments to
the regulatory text to ensure this same approach is applied to merged
and recently converted FCUs. The Board is proposing to use an average
of total assets because it believes that doing so will reduce the
effect of seasonal fluctuation in the total assets of FCUs, and will
provide more certainty to FCUs about their operating fee charges for
the forthcoming year. The change to a four-quarter average of reported
assets also reduces the risk that the Board will collect less in
operating fee revenue than it requires if actual assets reported in
FCUs' December Call Reports are below the asset growth assumption used
to set the operating fee rates in the budget.
In particular, the proposal would amend current Sec. 701.6(a) to
provide, among other things, that the operating fee shall be based on
the average of total assets of each FCU based on data reported in the
preceding four Call Reports (as reported on NCUA Form 5300 for natural
person FCUs and Form 5310 for corporate FCUs), or as otherwise
determined pursuant to paragraph (b) of Sec. 701.6. Specifically, when
determining the operating fee rate and the invoice amounts due, the
NCUA Board will use the average of FCUs' four most-recent Call Reports
available at the time the Board approves the budget for the forthcoming
year.
The Board anticipates that this change will have no impact on
current billing practices for newly chartered FCUs, since these credit
unions do not receive an operating fee invoice until the second year
after they are chartered. The Board will continue its current practice
of treating merged FCUs and conversions of non-FCUs into FCUs as a
single entity for purposes of calculating the average total assets that
are the basis for determining the amount of operating fees due. For
purposes of calculating the average total assets of an FCU that
converts from or merges with a federally insured state-chartered credit
union (FISCU), the Board proposes to compute comparable quarterly total
assets using the Call Report data in the agency's possession. For
conversions to an FCU charter from entities not insured by the NCUA,
the Board proposes to average assets based only on Call Reports filed
by the time the Board finalizes its budget because the NCUA cannot
validate the accuracy or consistency of other data sources that may be
similar to NCUA Call Reports.
In circumstances where a conversion to an FCU charter from an
entity not insured by the NCUA occurs in the fourth quarter of the year
before the operating fee is due, no Call Report data will be available
at the time the Board finalizes its budget, and the converted entity
will therefore pay no operating fee in the year following conversion.
While this approach would produce a different result based only on
insured status prior to conversion for entities that are otherwise of
the same FCU status after the conversion, the Board believes its lack
of access to verified Call Report data for non-NCUA insured entities
supports the distinction. In addition, the Board expects this will be a
rare occurrence, with relatively small impact, as the maximum amount of
forgone revenue is one quarter of reported assets for which a converted
entity could be exempt from paying an operating fee.
While this discrepancy could be avoided if the Board continued its
current practice of estimating December Call Report data as the sole
point of reference for determining total assets for the operating fee,
the Board believes the four-quarter average is more equitable on the
whole because it can account for seasonal share account fluctuations
that some FCUs experience based on the characteristics and transaction
patterns engaged in by their fields of membership. As discussed above,
the proposed four-quarter average approach also would eliminate the
risk that the Board could over- or under-collect operating fees based
on differences between its estimation of and actual December Call
Report data.\27\ The Board
[[Page 53712]]
requests comment on this proposed approach.
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\27\ While the proposed regulatory language introducing section
701.6(b)(2)(i)(B) could be read to require an entity not insured by
the NCUA that converts to a FCU charter in the fourth quarter to pay
a fee in the year following conversion, the lack of available Call
Report data prior to the date the Board adopts the budget would
preclude a fee in that scenario.
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With respect to mergers where an entity not insured by the NCUA
merges into a continuing FCU, the same issue exists with respect to the
Board's access to data comparable to the Call Report for periods prior
to the merger date. Here again, the proposal would combine assets
looking back four quarters for mergers involving two FCUs or where a
FISCU merges into a continuing FCU. On the other hand, for mergers into
FCUs of entities that are not insured by the NCUA, the proposed
regulation would not require combination of assets prior to the merger
date, since the NCUA does not collect asset data for entities it does
not insure. Instead the continuing FCU would pay a fee based only on
assets reported on its own Call Reports. Depending on the specific
timing of when the merger occurred, this could result in multiple
quarters where the assets acquired from the non-NCUA insured entity are
not included in the calculated average assets used to bill the
continuing FCU. For the same reasons expressed above with respect to
conversions, the Board believes the benefits of the four-quarter
average outweigh the different treatment for mergers with FISCUs
compared to mergers with entities not insured by the NCUA. The Board
also invites public comment on this aspect of the proposal.
With respect to purchase and assumption transactions, the
regulation presently designates that they will be treated as mergers in
circumstances where an FCU purchases all or essentially all of the
assets of another credit union. In this proposed rule, the Board
retains that language, but requests comment on alternative approaches
the Board may wish to consider. The Board acknowledges that, in some
circumstances, determining whether a purchase and assumption included
all or essentially all assets could be a difficult determination.
The Board also proposes some technical changes to existing rule
language. First, the proposal clarifies that the NCUA will not issue
refunds of operating fees to FCUs that convert to any other type of
charter, not just a state-charter. This ensures the same treatment for
a conversion to a mutual savings bank or any other charter type. The
Board also proposes to remove the language ``in the year in which the
conversion takes place'' from this provision, as a refund is never
provided to any converting FCU, regardless of timing. The Board
proposes the same changes to the rule text on refunds in the context of
mergers.
In addition, the Board proposes to expand the situations expressly
covered in the regulation to include conversions and mergers involving
entities not insured by the NCUA. Such transactions could involve
privately insured state-chartered credit unions or banking
institutions. To support this expansion, the proposed regulatory
language introduces the phrase ``entity not insured by the NCUA.'' In
the language specifying that certain purchase and assumption
transactions will be treated as mergers, the Board proposes to change
the term ``credit union'' to ``depository institution'' to clarify that
a purchase and assumption involving a bank, for example, would be
treated in the same manner. Finally, the proposal would divide
paragraph (b) of the regulation into additional subparagraphs to
improve readability. The Board invites comments on these technical
changes as well.
IV. Regulatory Procedures
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires that, in
connection with a notice of proposed rulemaking, an agency prepare and
make available for public comment an initial regulatory flexibility
analysis that describes the impact of a proposed rule on small
entities. A regulatory flexibility analysis is not required, however,
if the agency certifies that the rule will not have a significant
economic impact on a substantial number of small entities (defined for
purposes of the RFA to include federally insured credit unions with
assets less than $100 million) and publishes its certification and a
short, explanatory statement in the Federal Register together with the
rule. The proposed rule would make a technical change to the period for
measuring total assets for calculating the Operating Fee. However, the
Board does not believe the impact will disproportionally impact small
credit unions such that a regulatory flexibility analysis is required.
First, small credit unions are still required to report assets on a
quarterly basis, and the regulation only increases the number of
quarters the NCUA will consider in adjusting the operating fee. Nor
does the exclusion of PPP loans from assets increase reporting
requirements, as the NCUA already has the information necessary to make
that exclusion. Finally, although exclusion of PPP loans will decrease
fee amounts for some small credit unions, the Board does not believe
the change will amount to a significant impact on a substantial number
of small entities. Accordingly, the NCUA certifies that the proposed
rule will not have a significant economic impact on a substantial
number of small credit unions.
B. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in
which an agency creates a new or amends existing information collection
requirements.\28\ For the purpose of the PRA, an information collection
requirement may take the form of a reporting, recordkeeping, or a
third-party disclosure requirement. The proposed rule does not contain
information collection requirements that require approval by OMB under
the PRA.\29\
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\28\ 44 U.S.C. 3507(d); 5 CFR part 1320.
\29\ 44 U.S.C. Chap. 35.
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C. 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, the NCUA, an
independent regulatory agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the Executive Order. This proposed rulemaking
would not have a substantial direct effect 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. The NCUA has determined that this proposed rule does not
constitute a policy that has federalism implications for purposes of
the Executive Order.
D. Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this proposed rule will not affect
family well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999.\30\
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\30\ Public Law 105-277, 112 Stat. 2681 (1998).
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List of Subjects in 12 CFR Part 701
Credit unions, Low income, Nonmember deposits, Secondary capital,
Shares.
By the National Credit Union Administration Board on July 30,
2020.
Gerard Poliquin,
Secretary of the Board.
For the reasons discussed above, the Board proposes to amend 12 CFR
part 701 as follows:
[[Page 53713]]
PART 701--Organization and Operations of Federal Credit Unions
0
1. The authority citation for part 701 continues to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759,
1761a, 1761b, 1766, 1767, 1782, 1784, 1785, 1786, 1787, 1788, 1789.
Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.31
is also authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and
3601-3610. Section 701.35 is also authorized by 42 U.S.C. 4311-4312.
0
2. In Sec. 701.6 revise paragraphs (a) and (b) to read as follows:
Sec. 701.6 Fees paid by Federal credit unions.
(a) Basis for assessment. Each calendar year, or as otherwise
directed by the NCUA Board, each federal credit union shall pay an
operating fee to the NCUA for the current fiscal year (January 1 to
December 31) in accordance with a schedule fixed by the Board from time
to time.
(1) General. The operating fee shall be based on the average of
total assets of each federal credit union based on data reported in
NCUA Forms 5300 and 5310 from the four quarters immediately preceding
the time the Board approves the agency's budget or as otherwise
determined pursuant to paragraph (b) of this section.
(2) Exclusions from total assets. For purposes of calculating the
operating fee, total assets shall not include any loans on the books of
a natural person federal credit union made under the Small Business
Administration's Paycheck Protection Program, 15 U.S.C. 636(a)(36), or
any similar program approved for exclusion by the NCUA Board.
(b) Coverage. The operating fee shall be paid by each federal
credit union engaged in operations as of January 1 of each calendar
year in accordance with paragraph (a), except as otherwise provided by
this paragraph.
(1) New charters. A newly chartered federal credit union will not
pay an operating fee until the year following the first full calendar
year after the date chartered.
(2) Conversions.
(i) In the first calendar year following conversion:
(A) A federally insured state-chartered credit union that converts
to a federal credit union charter must pay an operating fee based on
the average assets reported in the year of conversion on NCUA Forms
5300 or 5310 from the four quarters immediately preceding the time the
Board approves the agency's budget in the year of conversion.
(B) An entity not insured by the NCUA that converts to a federal
credit union charter must pay an operating fee based on the assets, or
average thereof, reported on NCUA Forms 5300 or 5310 for any one or
more quarters immediately preceding the time the Board approves the
agency's budget in the year of conversion.
(ii) A federal credit union converting to a different charter will
not receive a refund of any operating fees paid to the NCUA.
(3) Mergers.
(i) In the first calendar year following merger:
(A) A continuing federal credit union that has merged with one or
more federally insured credit unions must pay an operating fee based on
the average combined total assets of the federal credit union and any
merged federally insured credit unions as reported on NCUA Forms 5300
or 5310 in the four quarters immediately preceding the time the Board
approves the agency's budget in the merger year.
(B) For purposes of this paragraph, a purchase and assumption
transaction where the continuing federal credit union purchases all or
essentially all of the assets of another depository institution shall
be deemed a merger.
(ii) A federal credit union that merges with a federal or state-
chartered credit union, or an entity not insured by the NCUA, will not
receive a refund of any operating fee paid to the NCUA.
(4) Liquidations. A Federal credit union placed in liquidation will
not pay any operating fee after the date of liquidation.
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[FR Doc. 2020-16981 Filed 8-28-20; 8:45 am]
BILLING CODE 7535-01-P