Loan Interest Rates, 42249-42251 [E6-11907]

Download as PDF rwilkins on PROD1PC63 with RULES_1 Federal Register / Vol. 71, No. 143 / Wednesday, July 26, 2006 / Rules and Regulations at the intersection of the Hickman/ Maury County line and Jones Valley Road; then east on Jones Valley Road to Leipers Creek Road; then south on Leipers Creek Road to Tennessee Highway 247; then northeast on Tennessee Highway 247 to Tennessee Highway 246; then north on Tennessee Highway 246 to the Maury/Williamson County line. * * * * * Roane County. The entire county. Rutherford County. That portion of the county lying northwest of a line beginning at the intersection of the Williamson/Rutherford County line and Rocky Fork Road; then northeast on Rocky Fork Road to Old Nashville Highway; then southeast on Old Nashville Highway to Tennessee Highway 102; then northeast on Tennessee Highway 102 to Weakley Lane; then north on Weakley Lane to Couchville Pike; then northwest on Couchville Pike to Corinth Road; then north on Corinth Road to the Rutherford/Wilson County line. Sequatchie County. The entire county. * * * * * Tipton County. That portion of the county lying south of a line beginning at the intersection of the Shelby/Tipton County line and Tennessee Highway 14; then northeast on Tennessee Highway 14 to Tennessee Highway 179; then southeast on Tennessee Highway 179 to the Tipton/Haywood County line. Van Buren County. That portion of the county lying south of Tennessee Highway 30. * * * * * Williamson County. That portion of the county lying northeast of a line beginning at the intersection of the Davidson/Williamson County line and U.S. Highway 31; then southwest on U.S. Highway 31 to U.S. Highway Business 431; then southeast on U.S. Highway Business 431 to Mack Hatcher Parkway; then north on Mack Hatcher Parkway to South Royal Oaks Boulevard; then northeast on South Royal Oaks Boulevard to Tennessee Highway 96; then east on Tennessee Highway 96 to Clovercroft Road; then northeast on Clovercroft Road to Wilson Pike; then north on Wilson Pike to Clovercroft Road; then northeast on Clovercroft Road to Rocky Fork Road; then east on Rocky Fork Road to the Williamson/Rutherford County line. * * * * * VerDate Aug<31>2005 16:29 Jul 25, 2006 Jkt 208001 Done in Washington, DC, this 20th day of July 2006. Kevin Shea, Acting Administrator, Animal and Plant Health Inspection Service. [FR Doc. E6–11938 Filed 7–25–06; 8:45 am] BILLING CODE 3410–34–P NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 701 RIN 3133–AD26 Loan Interest Rates National Credit Union Administration (NCUA). ACTION: Final rule. AGENCY: SUMMARY: NCUA is amending its lending rule to include the criteria the NCUA Board considers in setting a permissible interest rate for federal credit unions exceeding 15 percent and to establish procedures regarding publication of its determination. The amendment will allow NCUA to notify federal credit unions of any increase in the interest rate ceiling through a Letter to Federal Credit Unions, other NCUA publications, and a press release, instead of issuing an amendment to the regulation every 18 months as it has previously done. The amendment will eliminate unnecessary, periodic regulatory amendments and provides a more efficient and effective means of informing federal credit unions of the permissible interest rate. DATES: This final rule is effective September 9, 2006. FOR FURTHER INFORMATION CONTACT: Moisette I. Green, Staff Attorney, at Office of General Counsel, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314–3428 or telephone: (703) 518– 6540. SUPPLEMENTARY INFORMATION: I. Background The Federal Credit Union Act (the Act) sets a 15 percent ceiling on the interest rate federal credit unions may charge on loans to members unless, in 18-month intervals, the NCUA Board establishes a higher rate. 12 U.S.C. 1757(5)(A)(vi)(I). The Act authorizes the NCUA Board to establish a higher interest rate ceiling for periods of no more than 18 months based on consideration of certain economic criteria and after consulting with congressional committees, the Department of Treasury, and federal financial institution regulatory agencies. PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 42249 Id. The Board’s practice has been to exercise this authority by amending the general lending regulation. 12 CFR 701.21(c)(7). In the past, when the Board increased the interest rate ceiling, it has issued a final rule under the Administrative Procedure Act (APA) and published it in the Federal Register. 5 U.S.C. 553(b). Most recently, on January 13, 2005, the Board issued a final rule setting a higher maximum interest rate of 18 percent until September 8, 2006. 70 FR 3861 (January 27, 2005). The NCUA Board is amending its general lending rule regarding permissible interest rates to address the procedures for publication of a temporary increase in the maximum interest rate. This amendment provides that the Board, at least every 18 months, will make a determination in accordance with the requirements of the Act as to whether federal credit unions will be permitted to charge interest in excess of 15 percent and will provide notice of its determination through a Letter to Federal Credit Unions, other official NCUA publications, and in a press release. This new procedure for providing notice to federal credit unions regarding the Board’s determination on the permissible interest rate parallels the Board’s long-standing procedure in providing notice to federal credit unions of its determination of the annual operating fee charged to federal credit unions. The operating fee is charged to federal credit unions under a specific provision in the Act. 12 U.S.C. 1755(a). The Act provides for the Board to assess an annual operating fee on federal credit unions ‘‘[i]n accordance with rules prescribed by the Board.’’ Id. The regulation implementing the statutory operating fee provision is 12 CFR 701.6. This regulation does not set a particular operating fee, but describes the basis for assessment, coverage, the requirement of notice to credit unions, and so forth. The Board establishes the annual operating fee as part of adopting its annual budget at the end of each year, sets the operating fee as a sliding scale based on asset size for federal credit unions, and provides notice to federal credit unions. The Board provides notice, by regular or electronic mail, to all federal credit unions through a Letter to Federal Credit Unions that sets out the operating fee scale. In addition, the operating fee is itemized for federal credit unions in the individual invoice sent annually to all federally insured credit unions regarding their capitalization deposit that supports share account insurance. E:\FR\FM\26JYR1.SGM 26JYR1 rwilkins on PROD1PC63 with RULES_1 42250 Federal Register / Vol. 71, No. 143 / Wednesday, July 26, 2006 / Rules and Regulations The interest rate provision in the Act does not require the Board to implement its authority in a rule or regulation, but provides only that the Board can ‘‘establish’’ a higher rate subject to certain criteria. 12 U.S.C. 1757(5)(A)(vi)(I). Although the Board has used the procedure of issuing a final rule amending the general lending regulation, the Board concludes the Act does not require it to do so and that it may act to ‘‘establish’’ an interest rate by Board action and provide notice by other means. Further, the Board believes the new procedure of individual notice to federal credit unions and elimination of potential regulatory amendments every 18 months are a more efficient and effective means for the Board to address and for federal credit unions to be informed of permissible interest rates in accordance with the Act. Accordingly, the Board is revising the current regulation to provide that it will determine, under the Act’s criteria, no less than every 18 months regarding whether federal credit unions may charge interest rates in excess of 15 percent and will give notice to federal credit unions directly, in substantially the same way it provides notice of the federal credit union operating fee. Under the APA, notice and public comment are not required for interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice, or when the agency for good cause finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553(b). The Board has determined previously that notice and public comment for adjustments in the permissible interest rate ceiling are impractical and not in the public interest. See 70 FR 3861, 3863 (January 27, 2005). The Board notes the specific statutory criteria it must consider and the 18-month intervals for re-consideration make meaningful public comment virtually impossible. In addition, because of safety and soundness considerations, federal credit unions need to be able to forecast and adjust their rates to meet market changes with some degree of certainty as to what will be legally permissible. For these reasons, the Board’s long-standing practice has been to issue a final rule, rather than seeking public comment, to notify federal credit unions of adjustments in the maximum allowable interest rate in order to provide maximum flexibility and certainty for federal credit unions. Section 701.21(c)(7) of the NCUA regulations is amended to allow the Board to provide actual notice of any change in the interest rate ceiling to VerDate Aug<31>2005 16:29 Jul 25, 2006 Jkt 208001 federal credit unions. The APA permits executive agencies to personally serve or otherwise provide actual notice to persons subject to a rule instead of publishing it in the Federal Register. 5 U.S.C. 553(b). To publish an increase in the interest rate ceiling and comply with the requirements of section 107 of the Act, the Board must determine the ceiling in enough time to prevent a reversion to the statutory 15 percent maximum. 12 U.S.C. 1757(5)(A)(vi)(I). Before publishing any increase in the interest rate ceiling, the Board must coordinate with congressional committees, the Department of the Treasury, and other financial regulators, and consider other factors, such as money market rates and credit union safety and soundness. Id. If the Board makes an adjustment, providing notice to federal credit unions directly is more expedient than publishing it in the Federal Register. Accordingly, the Board is amending its procedure to allow for the actual notice of any increase in the maximum interest rate. The Board will notify federal credit unions of an increase in the interest rate ceiling through official NCUA publications and the media. NCUA’s primary method of notifying federal credit unions will be through a Letter to Federal Credit Unions. NCUA currently uses these Letters to notify credit unions of policy statements, examination procedures, practices, and other significant regulatory matters, including, as noted above, the operating fee scale. The Letters are sent to all Federal credit unions by first-class or electronic mail. Interested persons may obtain copies of the Letters from the NCUA Web site or by contacting the NCUA Publications Office. Additionally, the Board will provide notice of an adjustment in the maximum interest rate in a press release. Federal credit unions will usually receive notice of an adjustment within two to three days of the Board’s determination through these methods versus a general notice to the public of a regulatory amendment within a week through the Federal Register. Additionally, the Board notes that the approach in this amendment to § 701.21(c)(7) tracks the rules and procedures of the Federal Open Market Committee for publishing information relating to open market operations. 12 CFR 271.3. The Board has determined the amendments to § 701.21(c)(7), the methods for publishing an adjustment in the interest rate ceiling for federal credit unions, relate to statements of policy, internal procedures, and practices for which public notice, comment, and a delayed effective date PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 are not required under the APA. See 5 U.S.C. 553(b) and (d). II. Regulatory Procedures The Administrative Procedure Act The amendments in this rule address the Board’s procedure for providing notice to federal credit unions of the Board’s decision regarding changes in the permissible interest rate and are procedural rather than substantive. Therefore, the rule is exempt from notice and public comment. 5 U.S.C. 553(b)(3)(A). The Board is establishing September 9, 2006 as the effective date of this rule because the current expiration date for the last amendment to the lending rule establishing an 18 percent ceiling is September 8, 2006. The Board notes that, currently, there are legislative proposals under consideration in Congress that may affect the provision in the Act on interest rates and, as necessary, it will make changes in the lending rule and its procedures. Regulatory Flexibility Act The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a rule may have on a substantial number of small entities, those credit unions with less than ten million dollars in assets. This rule will not have a significant economic impact on a substantial number of small credit unions, and, therefore, a regulatory flexibility analysis is not required. Paperwork Reduction Act NCUA has determined that this rule will not increase paperwork requirements under the Paperwork Reduction Act of 1995 and regulations of the Office of Management and Budget. 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. This rule 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 rule does not constitute a policy that has federalism implications for purposes of the executive order. E:\FR\FM\26JYR1.SGM 26JYR1 Federal Register / Vol. 71, No. 143 / Wednesday, July 26, 2006 / Rules and Regulations The Treasury and General Government Appropriations Act, 1999—Assessment of Federal Regulations and Policies on Families The NCUA has determined that this rule will not affect family well-being within the meaning of the Treasury and General Government Appropriations Act, 1999, Public Law 105–277, 112 Stat. 2681 (1998). Small Business Regulatory Enforcement Fairness Act The Small Business Regulatory Enforcement Fairness Act of 1996, Pub. L. 104–121, (SBREFA) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the APA. 5 U.S.C. 551. The Office of Information and Regulatory Affairs, an office within OMB, has determined that, for purposes of SBREFA, this is not a major rule. As required by SBREFA, NCUA will file the appropriate reports with Congress and the General Accounting Office so that the rule may be reviewed. List of Subjects in 12 CFR Part 701 Credit, Credit unions, Loan interest rates. By the National Credit Union Administration Board on July 20, 2006. Mary F. Rupp, Secretary of the Board. For the reasons set forth in the preamble, the Board amends 12 CFR part 701 as set forth below: I percent per year on the unpaid balance inclusive of all finance charges. Federal credit unions may use variable rates of interest but only if the effective rate over the term of a loan or line of credit does not exceed the maximum permissible rate. (ii) Temporary rates. (A) At least every 18 months, the Board will determine if federal credit unions may extend credit to members at an interest rate exceeding 15 percent. After consultation with appropriate congressional committees, the Department of Treasury, and other federal financial institution regulatory agencies, the Board may establish a rate exceeding the 15 percent per year rate, if it determines money market interest rates have risen over the preceding sixmonth period and prevailing interest rate levels threaten the safety and soundness of individual federal credit unions as evidenced by adverse trends in liquidity, capital, earnings, and growth. (B) When the Board establishes a higher maximum rate, the Board will provide notice to federal credit unions of the adjusted rate by issuing a Letter to Federal Credit Unions, as well as providing information in other NCUA publications and in a statement for the press. (C) Federal credit unions may continue to charge rates exceeding the established maximum rate only on existing loans or lines of credit made before the effective date of any lowering of the maximum rate. * * * * * PART 701—ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS [FR Doc. E6–11907 Filed 7–25–06; 8:45 am] 1. The authority citation for part 701 is revised to read: DEPARTMENT OF TRANSPORTATION Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1759, 1761a, 1761b, 1766, 1767, 1784, 1787, 1789. Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.21 is also authorized by 5 U.S.C. 552. Section 701.31 is also authorized by 12 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601–3610. Section 701.35 is also authorized by 42 U.S.C. 4311–4312. Federal Aviation Administration BILLING CODE 7535–01–P I 14 CFR Part 23 [Docket No. CE248, Special Conditions No. 23–188–SC] I Special Conditions; Thielert Aircraft Engines (TAE) GmbH, Piper PA 28–161 Cadet, Warrior II and Warrior III Series Airplanes; Diesel Cycle Engine Using Turbine (Jet) Fuel § 701.21 Loans to members and lines of credit to members. AGENCY: 2. Amend § 701.21 by revising paragraphs (c)(7)(i) and (ii) to read as follows: rwilkins on PROD1PC63 with RULES_1 * * * * * (c) * * * (7) * * * (i) General. Except when the Board establishes a higher maximum rate, federal credit unions may not extend credit to members at rates exceeding 15 VerDate Aug<31>2005 16:29 Jul 25, 2006 Jkt 208001 Federal Aviation Administration (FAA), DOT. ACTION: Final special conditions. SUMMARY: These special conditions are issued for the Piper PA 28–161 Cadet, Warrior II and Warrior III series airplanes, with the installation of a Thielert Aircraft Engines (TAE) Model PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 42251 TAE 125–1 aircraft diesel engine (ADE). These airplanes will have a novel or unusual design feature(s) associated with the installation of a diesel cycle engine utilizing turbine (jet) fuel. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for installation of this new technology engine. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards. DATES: Effective Date: July 19, 2006. FOR FURTHER INFORMATION CONTACT: Peter L. Rouse, Federal Aviation Administration, Aircraft Certification Service, Small Airplane Directorate, ACE–111, 901 Locust, Kansas City, Missouri, 816–329–4135, fax 816–329– 4090. SUPPLEMENTARY INFORMATION: Background On February 11, 2002, TAE GmbH, of Lichtenstein, Germany applied for a supplemental type certificate to install a diesel cycle engine utilizing turbine (jet) fuel in Piper PA 28–161 Cadet, Warrior II and Warrior III series airplanes. The Piper PA 28–161 Cadet, Warrior II and Warrior III series airplanes, currently approved under Type Certificate No. 2A13, is a four-place, low wing, fixed tricycle landing gear, conventional planform airplane. The Piper PA 28–161 Cadet, Warrior II and Warrior III series airplanes to be modified have gross weights in the range of 2,325 to 2,440 pounds in the normal category. The affected series of airplanes have been equipped with various gasoline reciprocating engines of 160 horsepower. Expecting industry to reintroduce diesel engine technology into the small airplane fleet, the FAA issued Policy Statement PS–ACE100–2002–004 on May 15, 2004, which identified areas of technological concern involving introduction of new technology diesel engines into small airplanes. For a more detailed summary of the FAA’s development of diesel engine requirements, refer to this policy. The general areas of concern involved the power characteristics of the diesel engines, the use of turbine fuel in an airplane class that has typically been powered by gasoline fueled engines, the vibration characteristics and failure modes of diesel engines. These concerns were identified after review of the historical record of diesel engine use in aircraft and a review of the 14 CFR part 23 regulations, which identified specific regulatory areas that needed to be E:\FR\FM\26JYR1.SGM 26JYR1

Agencies

[Federal Register Volume 71, Number 143 (Wednesday, July 26, 2006)]
[Rules and Regulations]
[Pages 42249-42251]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-11907]


=======================================================================
-----------------------------------------------------------------------

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 701

RIN 3133-AD26


Loan Interest Rates

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: NCUA is amending its lending rule to include the criteria the 
NCUA Board considers in setting a permissible interest rate for federal 
credit unions exceeding 15 percent and to establish procedures 
regarding publication of its determination. The amendment will allow 
NCUA to notify federal credit unions of any increase in the interest 
rate ceiling through a Letter to Federal Credit Unions, other NCUA 
publications, and a press release, instead of issuing an amendment to 
the regulation every 18 months as it has previously done. The amendment 
will eliminate unnecessary, periodic regulatory amendments and provides 
a more efficient and effective means of informing federal credit unions 
of the permissible interest rate.

DATES: This final rule is effective September 9, 2006.

FOR FURTHER INFORMATION CONTACT: Moisette I. Green, Staff Attorney, at 
Office of General Counsel, National Credit Union Administration, 1775 
Duke Street, Alexandria, Virginia 22314-3428 or telephone: (703) 518-
6540.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Federal Credit Union Act (the Act) sets a 15 percent ceiling on 
the interest rate federal credit unions may charge on loans to members 
unless, in 18-month intervals, the NCUA Board establishes a higher 
rate. 12 U.S.C. 1757(5)(A)(vi)(I). The Act authorizes the NCUA Board to 
establish a higher interest rate ceiling for periods of no more than 18 
months based on consideration of certain economic criteria and after 
consulting with congressional committees, the Department of Treasury, 
and federal financial institution regulatory agencies. Id. The Board's 
practice has been to exercise this authority by amending the general 
lending regulation. 12 CFR 701.21(c)(7). In the past, when the Board 
increased the interest rate ceiling, it has issued a final rule under 
the Administrative Procedure Act (APA) and published it in the Federal 
Register. 5 U.S.C. 553(b). Most recently, on January 13, 2005, the 
Board issued a final rule setting a higher maximum interest rate of 18 
percent until September 8, 2006. 70 FR 3861 (January 27, 2005).
    The NCUA Board is amending its general lending rule regarding 
permissible interest rates to address the procedures for publication of 
a temporary increase in the maximum interest rate. This amendment 
provides that the Board, at least every 18 months, will make a 
determination in accordance with the requirements of the Act as to 
whether federal credit unions will be permitted to charge interest in 
excess of 15 percent and will provide notice of its determination 
through a Letter to Federal Credit Unions, other official NCUA 
publications, and in a press release.
    This new procedure for providing notice to federal credit unions 
regarding the Board's determination on the permissible interest rate 
parallels the Board's long-standing procedure in providing notice to 
federal credit unions of its determination of the annual operating fee 
charged to federal credit unions. The operating fee is charged to 
federal credit unions under a specific provision in the Act. 12 U.S.C. 
1755(a). The Act provides for the Board to assess an annual operating 
fee on federal credit unions ``[i]n accordance with rules prescribed by 
the Board.'' Id. The regulation implementing the statutory operating 
fee provision is 12 CFR 701.6. This regulation does not set a 
particular operating fee, but describes the basis for assessment, 
coverage, the requirement of notice to credit unions, and so forth. The 
Board establishes the annual operating fee as part of adopting its 
annual budget at the end of each year, sets the operating fee as a 
sliding scale based on asset size for federal credit unions, and 
provides notice to federal credit unions. The Board provides notice, by 
regular or electronic mail, to all federal credit unions through a 
Letter to Federal Credit Unions that sets out the operating fee scale. 
In addition, the operating fee is itemized for federal credit unions in 
the individual invoice sent annually to all federally insured credit 
unions regarding their capitalization deposit that supports share 
account insurance.

[[Page 42250]]

    The interest rate provision in the Act does not require the Board 
to implement its authority in a rule or regulation, but provides only 
that the Board can ``establish'' a higher rate subject to certain 
criteria. 12 U.S.C. 1757(5)(A)(vi)(I). Although the Board has used the 
procedure of issuing a final rule amending the general lending 
regulation, the Board concludes the Act does not require it to do so 
and that it may act to ``establish'' an interest rate by Board action 
and provide notice by other means. Further, the Board believes the new 
procedure of individual notice to federal credit unions and elimination 
of potential regulatory amendments every 18 months are a more efficient 
and effective means for the Board to address and for federal credit 
unions to be informed of permissible interest rates in accordance with 
the Act. Accordingly, the Board is revising the current regulation to 
provide that it will determine, under the Act's criteria, no less than 
every 18 months regarding whether federal credit unions may charge 
interest rates in excess of 15 percent and will give notice to federal 
credit unions directly, in substantially the same way it provides 
notice of the federal credit union operating fee.
    Under the APA, notice and public comment are not required for 
interpretative rules, general statements of policy, or rules of agency 
organization, procedure, or practice, or when the agency for good cause 
finds that notice and public comment are impracticable, unnecessary, or 
contrary to the public interest. 5 U.S.C. 553(b). The Board has 
determined previously that notice and public comment for adjustments in 
the permissible interest rate ceiling are impractical and not in the 
public interest. See 70 FR 3861, 3863 (January 27, 2005). The Board 
notes the specific statutory criteria it must consider and the 18-month 
intervals for re-consideration make meaningful public comment virtually 
impossible. In addition, because of safety and soundness 
considerations, federal credit unions need to be able to forecast and 
adjust their rates to meet market changes with some degree of certainty 
as to what will be legally permissible. For these reasons, the Board's 
long-standing practice has been to issue a final rule, rather than 
seeking public comment, to notify federal credit unions of adjustments 
in the maximum allowable interest rate in order to provide maximum 
flexibility and certainty for federal credit unions.
    Section 701.21(c)(7) of the NCUA regulations is amended to allow 
the Board to provide actual notice of any change in the interest rate 
ceiling to federal credit unions. The APA permits executive agencies to 
personally serve or otherwise provide actual notice to persons subject 
to a rule instead of publishing it in the Federal Register. 5 U.S.C. 
553(b). To publish an increase in the interest rate ceiling and comply 
with the requirements of section 107 of the Act, the Board must 
determine the ceiling in enough time to prevent a reversion to the 
statutory 15 percent maximum. 12 U.S.C. 1757(5)(A)(vi)(I). Before 
publishing any increase in the interest rate ceiling, the Board must 
coordinate with congressional committees, the Department of the 
Treasury, and other financial regulators, and consider other factors, 
such as money market rates and credit union safety and soundness. Id. 
If the Board makes an adjustment, providing notice to federal credit 
unions directly is more expedient than publishing it in the Federal 
Register. Accordingly, the Board is amending its procedure to allow for 
the actual notice of any increase in the maximum interest rate.
    The Board will notify federal credit unions of an increase in the 
interest rate ceiling through official NCUA publications and the media. 
NCUA's primary method of notifying federal credit unions will be 
through a Letter to Federal Credit Unions. NCUA currently uses these 
Letters to notify credit unions of policy statements, examination 
procedures, practices, and other significant regulatory matters, 
including, as noted above, the operating fee scale. The Letters are 
sent to all Federal credit unions by first-class or electronic mail. 
Interested persons may obtain copies of the Letters from the NCUA Web 
site or by contacting the NCUA Publications Office. Additionally, the 
Board will provide notice of an adjustment in the maximum interest rate 
in a press release. Federal credit unions will usually receive notice 
of an adjustment within two to three days of the Board's determination 
through these methods versus a general notice to the public of a 
regulatory amendment within a week through the Federal Register.
    Additionally, the Board notes that the approach in this amendment 
to Sec.  701.21(c)(7) tracks the rules and procedures of the Federal 
Open Market Committee for publishing information relating to open 
market operations. 12 CFR 271.3. The Board has determined the 
amendments to Sec.  701.21(c)(7), the methods for publishing an 
adjustment in the interest rate ceiling for federal credit unions, 
relate to statements of policy, internal procedures, and practices for 
which public notice, comment, and a delayed effective date are not 
required under the APA. See 5 U.S.C. 553(b) and (d).

II. Regulatory Procedures

The Administrative Procedure Act

    The amendments in this rule address the Board's procedure for 
providing notice to federal credit unions of the Board's decision 
regarding changes in the permissible interest rate and are procedural 
rather than substantive. Therefore, the rule is exempt from notice and 
public comment. 5 U.S.C. 553(b)(3)(A). The Board is establishing 
September 9, 2006 as the effective date of this rule because the 
current expiration date for the last amendment to the lending rule 
establishing an 18 percent ceiling is September 8, 2006. The Board 
notes that, currently, there are legislative proposals under 
consideration in Congress that may affect the provision in the Act on 
interest rates and, as necessary, it will make changes in the lending 
rule and its procedures.

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact a rule may have on a 
substantial number of small entities, those credit unions with less 
than ten million dollars in assets. This rule will not have a 
significant economic impact on a substantial number of small credit 
unions, and, therefore, a regulatory flexibility analysis is not 
required.

Paperwork Reduction Act

    NCUA has determined that this rule will not increase paperwork 
requirements under the Paperwork Reduction Act of 1995 and regulations 
of the Office of Management and Budget.

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. This rule 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 rule does not constitute a policy that has 
federalism implications for purposes of the executive order.

[[Page 42251]]

The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    The NCUA has determined that this rule will not affect family well-
being within the meaning of the Treasury and General Government 
Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 (1998).

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996, 
Pub. L. 104-121, (SBREFA) provides generally for congressional review 
of agency rules. A reporting requirement is triggered in instances 
where NCUA issues a final rule as defined by Section 551 of the APA. 5 
U.S.C. 551. The Office of Information and Regulatory Affairs, an office 
within OMB, has determined that, for purposes of SBREFA, this is not a 
major rule. As required by SBREFA, NCUA will file the appropriate 
reports with Congress and the General Accounting Office so that the 
rule may be reviewed.

List of Subjects in 12 CFR Part 701

    Credit, Credit unions, Loan interest rates.

    By the National Credit Union Administration Board on July 20, 
2006.
Mary F. Rupp,
Secretary of the Board.

0
For the reasons set forth in the preamble, the Board amends 12 CFR part 
701 as set forth below:

PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS

0
1. The authority citation for part 701 is revised to read:

    Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1759, 1761a, 
1761b, 1766, 1767, 1784, 1787, 1789. Section 701.6 is also 
authorized by 15 U.S.C. 3717. Section 701.21 is also authorized by 5 
U.S.C. 552. Section 701.31 is also authorized by 12 U.S.C. 1601 et 
seq.; 42 U.S.C. 1981 and 3601-3610. Section 701.35 is also 
authorized by 42 U.S.C. 4311-4312.


0
2. Amend Sec.  701.21 by revising paragraphs (c)(7)(i) and (ii) to read 
as follows:


Sec.  701.21  Loans to members and lines of credit to members.

* * * * *
    (c) * * *
    (7) * * *
    (i) General. Except when the Board establishes a higher maximum 
rate, federal credit unions may not extend credit to members at rates 
exceeding 15 percent per year on the unpaid balance inclusive of all 
finance charges. Federal credit unions may use variable rates of 
interest but only if the effective rate over the term of a loan or line 
of credit does not exceed the maximum permissible rate.
    (ii) Temporary rates. (A) At least every 18 months, the Board will 
determine if federal credit unions may extend credit to members at an 
interest rate exceeding 15 percent. After consultation with appropriate 
congressional committees, the Department of Treasury, and other federal 
financial institution regulatory agencies, the Board may establish a 
rate exceeding the 15 percent per year rate, if it determines money 
market interest rates have risen over the preceding six-month period 
and prevailing interest rate levels threaten the safety and soundness 
of individual federal credit unions as evidenced by adverse trends in 
liquidity, capital, earnings, and growth.
    (B) When the Board establishes a higher maximum rate, the Board 
will provide notice to federal credit unions of the adjusted rate by 
issuing a Letter to Federal Credit Unions, as well as providing 
information in other NCUA publications and in a statement for the 
press.
    (C) Federal credit unions may continue to charge rates exceeding 
the established maximum rate only on existing loans or lines of credit 
made before the effective date of any lowering of the maximum rate.
* * * * *

 [FR Doc. E6-11907 Filed 7-25-06; 8:45 am]
BILLING CODE 7535-01-P