CUNA Regulatory Comment Call
February 16, 2001
NCUA's Proposed Rule on Credit Union Service Organizations(NOT A MAJOR RULE)
- The proposed rule amends the current credit union service organization (CUSO) rules by making two changes. The first change will clarify that the current list of permissible activities is intended to establish broad categories and that these categories are intended to be illustrative, not exhaustive, of the activities that may be permissible. The rule will also encourage credit unions, before requesting a regulatory amendment, to seek an advisory opinion from the Office of General Counsel on whether a proposed activity falls within one of the authorized activities.
- The second change will add a federally-chartered corporation to the category of permissible structures for CUSOs. This change will allow a CUSO that engages in trust activities to be chartered as a national trust company.
- Comments on the proposed rule are due by April 23, 2001. Please submit your comments to CUNA by April 16, 2001.
Please feel free to fax your responses to CUNA at 202-371-8240; e-mail them to Associate General Counsel Mary Dunn at firstname.lastname@example.org or to Assistant General Counsel Jeffrey Bloch at email@example.com; or mail them to Mary or Jeff in c/o CUNA's Regulatory Advocacy Department, 805 15th Street, NW, Suite 300, Washington, DC 20005. Please contact us if you need more information. You may also contact us if you would like a copy of the proposed rule or you may access it on the Internet at the following address: http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/12cfrpart712-proposed.html
The current CUSO rules list 17 broad categories of permissible activities. There are also several subcategories within many of these broad categories. NCUA often receives questions about whether an activity is permissible if it is not specifically listed. The proposed rule is intended to clarify this issue.
DESCRIPTION OF THE PROPOSED RULE
The proposed rule will clarify that the current list of permissible CUSO activities is intended to establish broad categories and that these categories are intended to be illustrative, not exhaustive, of the activities that may be permissible. The rule will also encourage credit unions, before requesting a regulatory amendment, to seek an advisory opinion from the Office of General Counsel on whether a proposed activity falls within one of the authorized activities. This change to the CUSO rules is intended to reduce regulatory burden by allowing the rules to expand as technology evolves.
The current CUSO rules limit a CUSO structured as a corporation to a "corporation as established and maintained under relevant state law." This prevents a CUSO engaging in permissible trust activities from being chartered as a national trust company. The proposed rule will allow this structure by adding a federally-chartered corporation to the category of permissible structures for CUSOs. The Federal Credit Union Act does not prohibit such a structure if the trust company is not a depository institution.
QUESTIONS TO CONSIDER REGARDING NCUA's PROPOSED CUSO RULE
- Are the categories of permissible activities sufficiently broad to cover all activities and services that relate to the
routine daily operations of credit unions?
- The proposed rule is designed to provide additional flexibility regarding the CUSO rules. Does the rule achieve this
goal? Are there other changes that could be made that would provide additional flexibility or would otherwise reduce
- The proposed rule will allow CUSOs to be structured as federally-chartered corporations. Are there other types of
structures that should also be permitted?
- Do you have other suggestions for improving the CUSO rules?
- Other comments?
Eric Richard General Counsel (202) 508-6742 firstname.lastname@example.org |
Mary Mitchell Dunn SVP & Associate General Counsel (202) 508-6736 email@example.com
Jeffrey Bloch Assistant General Counsel (202) 508-6732 firstname.lastname@example.org
Catherine Orr Senior Regulatory Counsel (202) 508-6743 email@example.com