CUNA Regulatory Comment Call


February 16, 2001

NCUA's Proposed Rule on Credit Union Service Organizations

(NOT A MAJOR RULE)

EXECUTIVE SUMMARY

Please feel free to fax your responses to CUNA at 202-371-8240; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.com or to Assistant General Counsel Jeffrey Bloch at jbloch@cuna.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

BACKGROUND

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

Eric Richard • General Counsel • (202) 508-6742 • erichard@cuna.com
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 • mdunn@cuna.com
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 • jbloch@cuna.com
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 • corr@cuna.com