CUNA Regulatory Comment Call
June 18, 2001
Proposal Concerning Definitions and Technical Amendments In Various NCUA Rules
(NOT A MAJOR RULE)
The NCUA Board has issued for public comment a proposal that amends various rules to make technical corrections and add and revise certain definitions. NCUA has a policy of continually reviewing its regulations to determine whether they should be updated, clarified, simplified, or eliminated. Every year, NCUA examines one-third of its regulations as part of this annual rule review process. In its most recent review, NCUA has identified the following provisions as requiring revision:
- The proposed rule would add a new scope section and several definitions in the General Definitions section of NCUA s rules. The term "paid-in and unimpaired capital and surplus", defined as shares plus post-closing, undivided earnings, would be added. "Unimpaired capital and surplus" would be defined to have the same meaning. Post-closing undivided earnings incorporates and means the same as the language in the Bylaw provisions that define surplus (after all losses have been provided for and net earnings or net losses have been added thereto or deducted therefrom) and define unimpaired capital (less any losses that may have been incurred for which there is no reserve or which have not been charged against undivided earnings). FCU Bylaws, art. XVIII.§1(g), (h).
- The proposed definition would further clarify the meaning of paid-in and unimpaired capital and surplus by including the statement that This does not include regular reserves or special reserves required by law, regulation, or special agreement between the credit union and its regulator or share insurer. The proposal would similarly revise the definition for "paid-in and unimpaired capital and surplus" in the Credit Union Service Organization (CUSO) Rule as well as in the Central Liquidity Fund (CLF) Rule. In addition, the proposed rule would remove the obsolete definitions for "remaining maturity" and "gross income."
- Section 701.14 requires a credit union that is newly chartered or in troubled condition to report any changes in its board of directors, committee members, or senior executive officers to NCUA. The proposed rule would delete the two obsolete references to Section 116 of the Federal Credit Union Act (FCU Act), which was repealed when Congress enacted the Credit Union Membership Access Act (CUMAA), and replace them with references to the Prompt Corrective Action (PCA) Section (Section 216) of the FCU Act.
- As a very minor technical correction to the Supervisory Committee Audits Rule (Section 715.2(l)), the citation to the FCU Act would be changed from Section 111(b) to 12 U.S.C. 1761(b).
- According to Section 723.4 of the Member Business Loan Rule, "federally insured credit unions" are required to comply with provisions 701.21(a)-(g) of NCUAs general lending rule. If a federally insured state-chartered credit union has granted a member business loan, paragraphs (a) through (g) of the general lending rule do not apply unless the credit union is required to comply with them under part 741, Requirements for Insurance. Therefore, the proposal would change the wording in Section 723.4 to clarify that those provisions apply to "federally insured state-chartered credit unions."
- The proposed rule would update the reference in Part 790 to the "Office of Community Development Credit Unions" to reflect the Offices new name, the "Office of Credit Union Development."
Comments on the proposed rule are due to NCUA by August 20, 2001. Please submit your comments to CUNA by August 8, 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 Senior Regulatory Counsel Catherine Orr at email@example.com; or mail them to Mary or Catherine in c/o CUNAs Regulatory Advocacy Department, 805 15th Street, NW, Suite 300, Washington, DC 20005. You may also contact us if you would like a copy of the rules.
QUESTIONS REGARDING THE PROPOSAL
- Do you agree with the proposed definition of paid-in and unimpaired capital and surplus" as shares plus post-closing, undivided earnings?
- Do you agree that unimpaired capital and surplus" should be defined to mean the same as
paid-in and unimpaired capital and surplus?
- The Board believes adding the statement that This [paid-in and unimpaired capital and
surplus] does not include regular reserves or special reserves required by law, regulation, or
special agreement between the credit union and its regulator or share insurer will lessen
possible confusion by distinguishing between retained earnings in the PCA Rule, which
includes regular and special reserves and undivided earnings, which do not include them. Do you agree with the addition of this statement?
- Do you agree that the reference in the Member Business Loan Rule from federally insured
credit unions should be changed to federally insured state-chartered credit unions?
- 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