Post-Employment Restrictions for Certain NCUA Examiners, 43800-43802 [05-14808]

Agencies

• National Credit Union Administration

[Federal Register Volume 70, Number 145 (Friday, July 29, 2005)]
[Proposed Rules]
[Pages 43800-43802]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-14808]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 796


Post-Employment Restrictions for Certain NCUA Examiners

AGENCY: National Credit Union Administration (NCUA).

ACTION: Proposed rule.

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SUMMARY: NCUA proposes to add a new part to NCUA's regulations to 
implement new, post-employment restrictions that will apply to certain 
senior NCUA examiners starting December 17, 2005. The proposed rule 
prohibits senior NCUA examiners, for a year after leaving NCUA 
employment, from accepting employment with a credit union if they had 
continuing, broad responsibility for examination of that credit union 
for two or more months during their last 12 months of NCUA employment.

DATES: Comments must be received on or before September 27, 2005.

ADDRESSES: You may submit comments by any of the following methods 
(Please send comments by one method only):
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     NCUA Web Site: https://www.ncua.gov/
RegulationsOpinionsLaws/proposed_regs/proposed_regs. html. Follow the 
instructions for submitting comments.
     E-mail: Address to regcomments@ncua.gov. Include ``[Your 
name] Comments on Proposed Rule 796, Post-Employment Restrictions,'' in 
the e-mail subject line.
     Fax: (703) 518-6319. Use the subject line described above 
for e-mail.
     Mail: Address to Mary F. Rupp, Secretary of the Board, 
National Credit Union Administration, 1775 Duke Street, Alexandria, 
Virginia 22314-3428.
     Hand Delivery/Courier: Same as mail address.

FOR FURTHER INFORMATION CONTACT: Regina M. Metz, Staff Attorney, Office 
of General Counsel, at the above address or telephone (703) 518-6540.

SUPPLEMENTARY INFORMATION: On December 17, 2004, Congress enacted the 
Intelligence Reform Act, Public Law 108-458, creating new, post-
employment restrictions for certain federal employees who examine banks 
and credit unions. The law requires NCUA to prescribe its own 
regulation implementing this section for federal examiners of federally 
insured credit unions and consult to the extent it deems necessary with 
the federal banking agencies. NCUA staff has consulted with their 
interagency group so that our proposed rule is consistent and 
comparable with the joint notice of proposed rulemaking the federal 
banking agencies are issuing.

Proposed Changes

    The Board is proposing post-employment restrictions for certain 
NCUA examiners to implement recent amendments to the Federal Credit 
Union (FCU) Act. Pub. L. 108-458, Sec.  6303(c), 118 Stat. 3754 (2004); 
12 U.S.C. 1786(w). The post-employment restrictions will apply to 
senior examiners starting December 17, 2005. For a year after leaving 
NCUA employment, senior examiners would be prohibited from accepting 
employment with a federally insured credit union if they had 
continuing, broad responsibility for examination of that credit union 
for two or more months during their last 12 months of NCUA employment.
    The proposed rule implements the statutory provisions by giving 
NCUA the authority to issue administrative orders removing a person 
from a position with a federally insured credit union and barring 
further participation with that credit union or any federally insured 
credit union for up to five years. Also, the proposed rule implements 
the statute by imposing civil money penalties for violations of up to 
$250,000.
    The proposed rule clarifies the NCUA employees to whom the 
restriction will apply. 12 U.S.C. 1786(w)(3). Congress intended the 
one-year post-employment prohibition to apply to examiners with a 
``meaningful'' relationship to the credit union.\1\ Consistent with 
that intent, the proposal defines a ``senior examiner'' as an NCUA 
employee, commissioned as an examiner, who has continuing, broad, and 
lead responsibility for examining a particular federally insured credit 
union, routinely interacts with officers or employees of the credit 
union, and devotes a substantial portion of his or her time to 
supervising or examining that credit union.
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    \1\ 150 Cong. Rec. S10356 (daily ed. Oct. 4, 2004) (statement of 
Sen. Levin).
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    The reference to a ``substantial portion of time'' in the 
definition of senior examiner is intended to address the situation in 
which an NCUA employee examines or inspects a group of federally 
insured credit unions. The Board believes such an examiner would be a 
senior examiner for purposes of the proposed rule only for those credit 
unions to which he or she devotes substantial time. The Board believes 
that an examiner who divides his or her time across a portfolio of 
federally insured credit unions is less likely to develop a meaningful 
relationship with any one credit union. The determination of whether an 
examiner devotes a substantial portion of his or her time is 
necessarily case by case.
    While the one-year post-employment restriction can apply by its 
terms to all examiners, NCUA expects very few examiners to actually 
qualify as senior examiners. For example, NCUA expects most examiners 
in charge will not be subject to the one-year prohibition. Most NCUA 
examiners in charge examine multiple, federally insured credit unions 
in a single year and typically do not develop a sustained or meaningful 
relationship with any one credit union. Therefore, they would not be 
considered senior examiners under the proposal.
    Although NCUA expects very few of its employees will be subject to 
the restriction, NCUA anticipates these few would involve specialty 
examiners, such as corporate examiners or problem case officers. These 
specialty examiners are sometimes assigned to be dedicated to and in 
residence at a credit union for an extended period of time. Thus, the 
proposed rule includes an example that an NCUA resident corporate 
credit union examiner assigned to work at a federally insured, 
corporate credit union for two or more months during the last 12 months 
of that individual's employment with NCUA will be subject to the one-
year prohibition.
    The proposal defines the term consultant to include individuals who 
work directly on matters for, or on behalf of, a federally insured 
credit union. NCUA construes this to mean that a covered employee may 
not join a consulting group and accept an assignment directly for the 
credit union for which he or she served as senior examiner in two of 
the last 12 months of his or her NCUA employment. The employee, 
however, may join the consulting firm as long as he or she does not 
directly participate in a matter involving the relevant credit union. 
NCUA requests comment on whether the meaning of consultant is 
sufficiently

[[Page 43801]]

clear and whether there are other terms NCUA should define.
    The proposed rule also implements the statutory provision 
authorizing the NCUA Board to grant waivers if the NCUA Chairman 
certifies that granting the waiver would not affect the integrity of 
NCUA's supervisory program. NCUA anticipates waivers would involve 
highly unusual circumstances. The Board invites comment on any 
provisions of the proposed rule.

Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires NCUA to prepare an 
analysis to describe any significant economic impact any proposed 
regulation may have on a substantial number of small entities. NCUA 
considers credit unions having less than ten million dollars in assets 
to be small for purposes of RFA. Interpretive Ruling and Policy 
Statement (IRPS) 87-2 as amended by IRPS 03-2. The proposal prohibits 
senior examiners from accepting employment with a credit union if they 
had continuing, broad responsibility for examination of that credit 
union for two or more months during their last 12 months of NCUA 
employment. The NCUA has determined and certifies that this proposed 
rule, if adopted, will not have a significant economic impact on a 
substantial number of small credit unions. Accordingly, the NCUA has 
determined that an RFA analysis is not required. NCUA solicits comment 
on this analysis and welcomes any information that would suggest a 
different conclusion.

Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (PRA), NCUA may not conduct or sponsor, and the respondent is 
not required to respond to, an information collection unless it 
displays a currently valid Office of Management and Budget (OMB) 
control number. The Board has determined that the proposed rule does 
not contain any information collections and, therefore, no PRA number 
is required.

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, NCUA, an independent 
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies 
with the executive order. It will not have substantial direct effects 
on the States, on the relationship between the National Government and 
the States, or on the distribution of power and responsibilities among 
the various levels of government. NCUA has determined that this 
proposal does not constitute a policy that has federalism implications 
for purposes of the executive order.

The Treasury and General Government Appropriations Act, 1999--
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, Pub. L. 105-277, 112 Stat. 
2681 (1998).

Agency Regulatory Goal

    NCUA's goal is to promulgate clear and understandable regulations 
that impose minimal regulatory burden. NCUA requests comments on 
whether the proposed rule is understandable and minimally intrusive if 
implemented as proposed.

List of Subjects in 12 CFR Part 796

    Conflicts of interest, Credit unions, Ethical conduct, Government 
employees.

    By the National Credit Union Administration Board on July 21, 
2005.
Mary F. Rupp,
Secretary of the Board.
    Accordingly, NCUA proposes to add a new 12 CFR part 796 as follows:

PART 796--POST-EMPLOYMENT RESTRICTIONS FOR CERTAIN NCUA EXAMINERS

Sec.
796.1 What is the purpose and scope of this part?
796.2 Who is considered a senior examiner of the NCUA?
796.3 What special post-employment restrictions apply to senior 
examiners?
796.4 When do these special restrictions become effective and may 
they be waived?
796.5 What are the penalties for violating these special post-
employment restrictions?
796.6 What other definitions and rules of construction apply for 
purposes of this part?

    Authority: 12 U.S.C. 1786(w).


Sec.  796.1  What is the purpose and scope of this part?

    This part identifies those National Credit Union Administration 
(NCUA) employees who are subject to the special, post-employment 
restrictions in section 1786(w) of the Act and implements those 
restrictions as they apply to NCUA employees.


Sec.  796.2  Who is considered a senior examiner of the NCUA?

    For purposes of this part, an NCUA employee is considered to be the 
``senior examiner'' for a federally insured credit union if the 
employee--
    (a) Has been commissioned by NCUA to conduct examinations or 
inspections of federally insured credit unions on behalf of NCUA;
    (b) Has continuing, broad, and lead responsibility for examining or 
inspecting that federally insured credit union;
    (c) Routinely interacts with officers or employees of that 
federally insured credit union; and
    (d) Devotes a substantial portion of his or her time to supervising 
or examining that federally insured credit union.


Sec.  796.3  What special post-employment restrictions apply to senior 
examiners?

    (a) Senior examiners of federally insured credit unions. An officer 
or employee of the NCUA who serves as the senior examiner of a 
federally insured credit union for two or more months during the last 
12 months of individual's employment with NCUA may not, within one year 
after leaving NCUA employment, knowingly accept compensation as an 
employee, officer, director, or consultant from that credit union.
    (b) Example. An NCUA resident corporate credit union examiner 
assigned to work at a federally insured, corporate credit union for two 
or more months during the last 12 months of that individual's 
employment with NCUA will be subject to the one-year prohibition of 
this section.


Sec.  796.4  When do these special restrictions become effective and 
may they be waived?

    The post-employment restrictions in section 1786(w) of the Act and 
Sec.  796.3 do not apply to any current or former NCUA employee, if--
    (a) The individual ceased to be an NCUA employee on or before 
December 17, 2005; or
    (b) The Chairman of the NCUA Board certifies in writing and on a 
case-by-case basis that granting the senior examiner a waiver of the 
restrictions would not affect the integrity of the NCUA's supervisory 
program.


Sec.  796.5  What are the penalties for violating these special post-
employment restrictions?

    (a) Penalties under section 1786(w)(5) of the Act. An NCUA senior 
examiner who violates the post-employment restrictions set forth in 
Sec.  796.3 can be--
    (1) Removed from participating in the affairs of the relevant 
credit union and

[[Page 43802]]

prohibited from participating in the affairs of any federally insured 
credit union for a period of up to five years; and, alternatively, or 
in addition,
    (2) Assessed a civil monetary penalty of not more than $250,000.
    (b) Other penalties. The penalties in paragraph (a) of this section 
are not exclusive, and a senior examiner who violates the restrictions 
in Sec.  796.3 also may be subject to other administrative, civil, and 
criminal remedies and penalties as provided in law.


Sec.  796.6  What other definitions and rules of construction apply for 
purposes of this part?

    For purposes of this part, a person shall be deemed to act as a 
``consultant'' for a federally insured credit union or other company 
only if the person works directly on matters for, or on behalf of, such 
credit union.

[FR Doc. 05-14808 Filed 7-28-05; 8:45 am]
BILLING CODE 7535-01-P