CUNA Regulatory Comment Call


July 27, 2001

NCUA’s Proposal Expanding Travel Reimbursement Rules

(MAJOR RULE – APPLIES TO FEDERAL CREDIT UNIONS)

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.

BACKGROUND

The Federal Credit Union Act (FCUA) and the National Credit Union Administration (NCUA) rules provide that only one board officer of an FCU may receive compensation. However, all FCU officials may receive reimbursement for reasonable and proper expenses that are necessary in order to carry out the responsibilities of the position. This includes the reimbursement for travel expenses if the expenses are appropriate and are made in accordance with written board policies and procedures.

Originally, reimbursement for travel expenses was limited only to the official. Based on the urging of CUNA and many in the credit union movement, this was changed in 1992 to reflect the need to allow a spouse or immediate family member to travel with the official.

DESCRIPTION OF THE PROPOSED RULE

NCUA recognizes that an official may have a need to travel with a companion who may not be an immediate family member. The proposed rule will, therefore, allow FCUs to adopt policies that provide reimbursement of travel expenses for a "guest" that travels with a credit union official on business. This will provide the official with the discretion to choose the travel companion.

As under the current rules, FCUs do not have to adopt this policy and may instead impose more restrictive policies with regard to travel reimbursements. NCUA also has sufficient authority to restrict reimbursements for those credit unions in which there is a safety and soundness concern.

Although the proposed rule will provide FCUs with much needed flexibility, it will have no effect on IRS rules regarding the reporting and taxation of these reimbursements. Credit union officials will still need to be aware of the tax consequences of the money because the reimbursements will still be considered income and must be reported to the IRS.

QUESTIONS TO CONSIDER REGARDING NCUA’s PROPOSAL EXPANDING THE TRAVEL REIMBURSEMENT RULES

  1. Should the rules regarding travel reimbursement for FCUs be expanded further? How can the rules be expanded and how can these expansions be justified? For example, are there situations in which the reimbursement of more than one "guest" would be necessary and appropriate?







  2. Should the specific regulatory provisions regarding the reimbursement of travel companions be eliminated entirely so that FCUs can have discretion to develop the policies necessary to attract and retain credit union officials? Is NCUA’s authority to regulate safety and soundness sufficient to address any regulatory concerns that may arise as a result of deleting these regulatory provisions?









  3. Other comments?










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