Corporate Credit Unions, 60651-60655 [2010-24659]

Download as PDF Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Proposed Rules annuity computation under 5 U.S.C. 8415(d). (f) While an employee who does not hold a primary or secondary position is detailed or temporarily promoted to such a position, the additional withholdings and agency contributions will not be made. (g) While an employee who holds a primary or secondary position is detailed or temporarily promoted to a position that is not a primary or secondary position, the additional withholdings and agency contributions will continue to be made. § 842.1006 Mandatory separation. (a) Except as provided in paragraph (d) of this section, the mandatory separation provisions of 5 U.S.C. 8425 apply to customs and border protection officers, including those in secondary positions. A mandatory separation under 5 U.S.C. 8425 is not an adverse action under part 752 of this chapter or a removal action under part 359 of this chapter. (b) Exemptions from mandatory separation are subject to the conditions set forth under 5 U.S.C. 8425. An exemption may be granted at the sole discretion of the head of the employing agency or by the President in accordance with 5 U.S.C. 8425(c). (c) In the event that an employee is separated mandatorily under 5 U.S.C. 8425, or is separated for optional retirement under 5 U.S.C. 8412 (d) or (e), and OPM finds that all or part of the minimum service required for entitlement to immediate annuity was in a position that did not meet the requirements of a primary or secondary position and the conditions set forth in this subpart or, if applicable, in part 831 of this chapter, such separation will be considered erroneous. (d) The customs and border protection officer mandatory separation provisions of 5 U.S.C. 8425 do not apply to an individual first appointed as a customs and border protection officer before July 6, 2008. jlentini on DSKJ8SOYB1PROD with PROPOSALS § 842.1007 Review of decisions. (a) The final decision of the agency head denying an individual’s request for approval of a position as a rigorous, secondary, or air traffic controller position made under § 842.1003(a) may be appealed to the Merit Systems Protection Board under procedures prescribed by the Board. (b) The final decision of the agency head denying an individual coverage while serving in an approved secondary position because of failure to meet the conditions in § 842.1003(b) may be appealed to the Merit Systems VerDate Mar<15>2010 16:54 Sep 30, 2010 Jkt 223001 Protection Board under procedures prescribed by the Board. § 842.1008 Oversight of coverage determinations. (a) Upon deciding that a position is a customs and border protection officer, the U.S. Department of Homeland Security must notify OPM (Attention: Director, Planning and Policy Analysis, or such other official as may be designated) stating the title of each position, the occupational series of the position, the number of incumbents, whether the position is primary or secondary, and, if the position is a primary position, the established maximum entry age, if one has been established. The Director of OPM retains the authority to revoke the agency head’s determination that a position is a primary or secondary position. (b) The U.S. Department of Homeland Security must establish and maintain a file containing all coverage determinations made by the agency head under § 842.1003(a) and (b), and all background material used in making the determination. (c) Upon request by OPM, the U.S. Department of Homeland Security will make available the entire coverage determination file for OPM to audit to ensure compliance with the provisions of this subpart. (d) Upon request by OPM, the U.S. Department of Homeland Security must submit to OPM a list of all covered positions and any other pertinent information requested. § 842.1009 Elections of Retirement Coverage, exclusions from retirement coverage, and proportional annuity computations. (a) Election of coverage. (1) The U.S. Department of Homeland Security must provide an individual who is a customs and border protection officer on December 26, 2007, with the opportunity to right to elect to be treated as a customs and border protection officer under section 535(a) and (b) of the Department of Homeland Security Appropriations Act, 2008, Public Law 110–161, 121 Stat. 2042). (2) An election under this paragraph (a) is valid only if made on or before June 22, 2008. (3) An individual eligible to make an election under this paragraph (a) who fails to make such an election on or before June 22, 2008, is deemed to have elected to be treated as a customs and border protection officer for retirement purposes. (b) Exclusion from coverage. The provisions of this subpart and any other specific reference to customs and border PO 00000 Frm 00009 Fmt 4702 Sfmt 4702 60651 protection officers in this part do not apply to employees who on December 25, 2007, were law enforcement officers, under subpart H of this part or subpart I of part 831, within U.S. Customs and Border Protection. These employees cannot elect to be treated as a customs and border protection officer under paragraph (a), nor can they be deemed to have made such an election. (c) Proportional annuity computation. The annuity of an employee serving in a primary or secondary customs and border protection officer position on July 6, 2008, must, to the extent that its computation is based on service rendered as a customs and border protection officer on or after that date, be at least equal to the amount that would be payable— (1) To the extent that such service is subject to the Civil Service Retirement System, by applying section 8339(d) of title 5, United States Code, with respect to such service; and (2) To the extent such service is subject to the Federal Employees’ Retirement System, by applying section 8415(d) of title 5, United States Code, with respect to such service. [FR Doc. 2010–24496 Filed 9–30–10; 8:45 am] BILLING CODE 6325–39–P NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 704 RIN 3133–AD80 Corporate Credit Unions National Credit Union Administration (NCUA). ACTION: Proposed Interpretive Ruling and Policy Statement 10–XX. AGENCY: The NCUA Board is proposing to adopt an Interpretive Ruling and Policy Statement (IRPS) setting forth the requirements and process for chartering corporate federal credit unions. DATES: Comments must be received on or before November 1, 2010. ADDRESSES: You may submit comments by any of the following methods (Please send comments by one method only): • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. • NCUA Web site: http:// www.ncua.gov/Resources/ RegulationsOpinionsLaws/ ProposedRegulations.aspx. Follow the instructions for submitting comments. • E-mail: Address to regcomments@ncua.gov. Include ‘‘[Your SUMMARY: E:\FR\FM\01OCP1.SGM 01OCP1 60652 Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Proposed Rules name] Comments on ‘‘Notice of Proposed Rulemaking for Corporate FCU Chartering’’ in the e-mail subject line. • Fax: (703) 518–6319. Use the subject line described above for e-mail. • Mail: Address to Mary Rupp, Secretary of the Board, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314– 3428. • Hand Delivery/Courier: Same as mail address. Public Inspection: All public comments are available on the agency’s Web site at http://www.ncua.gov/ Resources/RegulationsOpinionsLaws/ ProposedRegulations.aspx as submitted, except as may not be possible for technical reasons. Public comments will not be edited to remove any identifying or contact information. Paper copies of comments may be inspected in NCUA’s law library at 1775 Duke Street, Alexandria, Virginia 22314, by appointment weekdays between 9 a.m. and 3 p.m. To make an appointment, call (703) 518–6546 or send an e-mail to OGCMail@ncua.gov. FOR FURTHER INFORMATION CONTACT: Lisa Henderson, Staff Attorney, Office of General Counsel, at the address above or telephone: (703) 518–6540; or Dave Shetler, Deputy Director, Office of Corporate Credit Unions, at the address above or telephone: (703) 518–6640. SUPPLEMENTARY INFORMATION: jlentini on DSKJ8SOYB1PROD with PROPOSALS A. Background NCUA recently finalized changes to its Corporate Credit Union Rule, 12 CFR part 704. These changes, as well as NCUA’s other efforts to resolve the problems created by the legacy assets remaining in the corporate credit union system, are likely to result in a fundamental restructuring of the corporate credit union system. As part of this restructuring, NCUA believes that some groups of natural person credit unions may wish to form new corporate credit unions. NCUA first issued guidance on chartering corporate federal credit unions (corporate FCUs) in 1982, but withdrew this guidance and never reissued it. See NCUA Interpretive Ruling and Policy Statement (IRPS) 82– 6. In light of the impending changes to the corporate system, NCUA is now reissuing chartering guidance in the form of a new proposed IRPS. The proposed IRPS explains the requirements for prospective new corporate FCUs and NCUA’s standards for evaluating applications and will assist credit union officials in assessing the feasibility of a new corporate VerDate Mar<15>2010 16:54 Sep 30, 2010 Jkt 223001 charter. The proposed IRPS also lists timeframes for NCUA action on corporate charter applications. The proposal requires charter applicants submit various information to NCUA, including: • A detailed business plan; • NCUA Form 4001, the Federal Credit Union Organization Report; • NCUA Forms 9500 and 9501, regarding federal share insurance for member accounts; • NCUA Form 4012, containing key biographical information and authorization of a background check and credit check for each prospective board member, credit and supervisory committee member, and senior management employee; and • NCUA Form 4008, the credit union’s organization certificate. The proposed IRPS also includes detailed timelines for processing a charter application. B. Comment Period and Charter Applications Submitted Before IRPS Is Finalized The Board is proposing this IRPS with a 30-day comment period rather than NCUA’s standard 60-day comment period. The Board believes that this proposal is neither novel nor complex, and that 30 days should be sufficient for all parties interested in commenting. Any charter application submitted before this IRPS is finalized should conform to the requirements of the proposed IRPS, and NCUA will process applications under the terms of the proposed IRPS until the IRPS is finalized. The possibility of impending charter applications further supports the Board’s perceived need for a shorter comment period and a quicker finalization of the IRPS. C. Regulatory Procedures Regulatory Flexibility Act The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact any proposed regulation may have on a substantial number of small entities (those under $10 million in assets). The proposed IRPS only applies to corporate credit unions, all of which have assets well in excess of $10 million. Accordingly, the proposed IRPS 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 The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in which PO 00000 Frm 00010 Fmt 4702 Sfmt 4702 an agency by rule creates a new paperwork burden on regulated entities or modifies an existing burden. 44 U.S.C. 3507(d); 5 CFR part 1320. For purposes of the PRA, a paperwork burden may take the form of either a reporting or a recordkeeping requirement, both referred to as information collections. The Office of Management and Budget (OMB) has approved the current information collection requirements in part 704 and assigned them control number 3133– 0129. The proposed IRPS contains an additional information collection in the form of an application requirement. Any group of persons creating a new federally chartered corporate credit union must apply for NCUA’s approval. As required by the PRA, NCUA is submitting a copy of this proposed IRPS to OMB for its review and approval. Persons interested in submitting comments with respect to the information collection aspects of the proposed IRPS should submit them to OMB at the address noted below. 1. Estimated PRA Burden The following describes the application requirements in the proposed IRPS that create manhour burdens: a. Form 4001 and Business Plan The proposed IRPS requires applicants for a corporate FCU charter to submit Form 4001, which lists the prospective credit union’s officers, directors and basic information about proposed operations. Form 4001 also requires applicants to submit a business plan. For corporate credit union charter applications, the business plan must address the following items: • Mission statement; • Analysis of market conditions (i.e., economic prospects for the corporate credit union and availability of proposed financial services from alternative depository institutions); • Summary of survey results and/or customer base analysis; • Proposed financial services to be offered; • How and when services are to be implemented; • Anticipated corporate credit union staffing and credentials of key employees; • Physical facility—office and equipment; • Proposed recordkeeping, data processing, and communications systems and/or vendors; • Budget for the first three years; • Semiannual pro-forma financial statements for the first three years, E:\FR\FM\01OCP1.SGM 01OCP1 Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Proposed Rules including a listing of the assumptions used to develop the financial statements; • Goals for the number of members and shares under various scenarios; • Projected break-even or date of achieving independent operations; • Source of funds to pay expenses during the initial setup and early months of operation; • Written policies for shares, lending, investments, funds management, capital accumulation as required by part 704, payment systems, and EDP; • Plan for continuity—directors, committee members, and senior management; • Evidence of commitment (i.e., letters and/or contracts used to substantiate projections); and • Services and marketing strategies for financial and correspondent services, including the ability of the proposed corporate credit union to efficiently deliver these products. While the precise time necessary to prepare the business plan will vary with the intended complexity and activities of the proposed corporate credit union, NCUA estimates that on average, preparation of Form 4001 and an acceptable business plan will require 300 hours. b. Form 4012, Report of Official or Employee NCUA requires each prospective board member, members of key committees, and senior management employees to submit this form providing basic biographical information and authorizing NCUA to conduct a background and credit check. Because the form is straightforward and applicants are likely to have most of the information requested in other formats, such as resumes, NCUA estimates completion of the form will take no more than one hour for each individual required to submit the form. jlentini on DSKJ8SOYB1PROD with PROPOSALS c. Forms 9500 and 9501, Insurance Forms NCUA requires the prospective chief executive officer and recording officer to submit Form 9500 to certify that the prospective board has adopted a resolution that the prospective FCU will apply for federal share insurance. NCUA requires the chair and the chief financial officer to submit Form 9501 to apply for federal share insurance. NCUA estimates completion of both these forms will require no more than one hour per charter applicant. d. Form 4008, Organization Certificate Prospective organizers must also submit an organization certificate listing VerDate Mar<15>2010 16:54 Sep 30, 2010 Jkt 223001 the credit union’s name and names and contact information of the initial subscribers. NCUA estimates that collection of the required information and completion of this form should require no more than two hours per charter applicant. 2. Summary of Collection Burden NCUA estimates the total information collection burden represented by the proposal, as follows: Estimated annual number of respondents: 1 corporate FCU charter applicant. Preparation of Form 4001 and business plan: 1 charter applicant × 300 hours = 300 hours. Preparation of NCUA Form 4012: 1 charter applicant × 25 individual officials, committee members and employees per applicant × 1 hour per individual = 25 hours. Preparation of NCUA Forms 9500 and 9501: 1 charter applicant × 1 hour = 1 hour. Preparation of NCUA Form 4008: 1 charter applicant × 2 hours = 2 hours. Total estimated annual burden hours: 328 hours. The NCUA considers comments by the public on this proposed collection of information in: • Evaluating whether the proposed collection of information is necessary for the proper performance of the functions of the NCUA, including whether the information will have a practical use; • Evaluating the accuracy of the NCUA’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; • Enhancing the quality, usefulness, and clarity of the information to be collected; and • Minimizing the burden of collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology; e.g., permitting electronic submission of responses. The Paperwork Reduction Act requires OMB to make a decision concerning the collection of information contained in the proposed regulation between 30 and 60 days after publication of this document in the Federal Register. Therefore, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. This does not affect the deadline for the public to comment to the NCUA on the proposed regulation. Comments on the proposed information collection requirements PO 00000 Frm 00011 Fmt 4702 Sfmt 4702 60653 should be sent to: Office of Information and Regulatory Affairs, OMB, New Executive Office Building, Washington, DC 20503; Attention: NCUA Desk Officer, with a copy to Mary Rupp, Secretary of the Board, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314– 3428. 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. The proposed IRPS would not have substantial direct effects on the states, on the connection 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 IRPS will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105–277, 112 Stat. 2681 (1998). By the National Credit Union Administration Board on September 24, 2010. Mary F. Rupp, Secretary of the Board. Authority: 12 U.S.C. 1753, 1754, 1758, 1766. Corporate Federal Credit Union Chartering Guidelines I—Goals of NCUA Corporate Chartering Guidelines These guidelines are intended to achieve the following goals: • Uphold the provisions of the Federal Credit Union Act (Act); • Promote safety and soundness within the credit union industry; and • Provide quality services to members. NCUA will consider the above criteria as the primary factors in determining whether to approve a corporate federal credit union (FCU) charter. In unusual circumstances, NCUA may consider E:\FR\FM\01OCP1.SGM 01OCP1 60654 Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Proposed Rules other information in deciding if a charter should be approved, such as other federal law or public policies. II—Subscribers Seven or more natural person representatives of natural person credit unions (NPCUs)—‘‘the subscribers’’— must present to NCUA for approval a sworn organization certificate stating at a minimum: • The name of the proposed corporate FCU; • The location of the proposed corporate FCU; • The names and addresses of the subscribers to the certificate and the number of shares subscribed by each; • The initial par value of the shares; and • The proposed field of membership. False statements on any of the required documentation filed in obtaining an FCU charter may be grounds for federal criminal prosecution. III—Economic Advisability A—General Before chartering a corporate FCU, NCUA must be satisfied that the institution will be viable and that it will provide needed services to its members. NCUA will conduct an independent investigation of each charter application to ensure that the proposed corporate credit union can be successful. In general, the success of any credit union depends on: (a) The character and fitness of management; (b) the depth of the members’ support; and (c) present and projected market conditions. jlentini on DSKJ8SOYB1PROD with PROPOSALS B—Proposed Management’s Character and Fitness The Act requires NCUA to ensure that the subscribers of federal charters are of good ‘‘general character and fitness.’’ In addition, employees and officials must be competent, experienced, honest, and of good character. NCUA will conduct background and credit investigations on prospective officials and employees, and the reports must establish each applicant’s character and ability to effectively handle financial matters. Factors that may lead to disapproval of a prospective official or employee include criminal convictions, indictments, and acts of fraud and dishonesty. Other factors, such as serious or unresolved past due credit obligations and bankruptcies disclosed during credit checks, may also disqualify an individual. NCUA also needs reasonable assurance that the management team will have the requisite skills— VerDate Mar<15>2010 16:54 Sep 30, 2010 Jkt 223001 particularly in leadership, accounting, funds management, and payment systems risk—and the commitment to dedicate the time and effort needed to make the proposed corporate FCU a success. Section 701.14 of NCUA’s Rules and Regulations sets forth the procedures for NCUA approval of officials of newly chartered FCUs, including corporate FCUs. If the application of a prospective official or employee to serve is not acceptable to NCUA’s Director, Office of Corporate Credit Unions (OCCU), the group can propose an alternate to act in that individual’s place. If the charter applicant feels it is essential that the disqualified individual be retained, the individual may appeal the OCCU’s decision to the NCUA Board. If an appeal is pursued, action on the application may be delayed. If the appeal is denied by the NCUA Board, an applicant acceptable to NCUA must be provided before the charter can be approved. C—Member Support An important chartering consideration is the degree of support from the field of membership. The charter applicant must demonstrate a sufficient customer base from which to draw business in the form of membership applications, capital and share commitments, and commitments to use the corporate FCU’s services. The applicant must provide surveys and/or written commitments certifying to this potential membership base and capital commitment to the levels required by Part 704 of NCUA’s Rules and Regulations. Although NCUA may work with a newly chartered corporate on a plan to meet the retained earnings requirements of Part 704, the newly chartered corporate must have a viable plan to solicit and maintain sufficient contributed capital. Generally, the plan must show how the corporate FCU will keep its total capital at 4 percent or more of its moving daily average net assets at all times beginning on the date NCUA issues the charter. D—Present and Future Market Conditions—Business Plan The ability to provide effective service to members, compete in the marketplace, and adapt to changing market conditions are key to the survival of any enterprise. Before NCUA will charter a corporate credit union, a charter applicant must submit a business plan based on realistic and supportable projections and assumptions. The business plan should contain, at a minimum, the following elements: PO 00000 Frm 00012 Fmt 4702 Sfmt 4702 (1) Mission statement; (2) Analysis of market conditions (i.e., economic prospects for the corporate credit union and availability of proposed financial services from alternative depository institutions); (3) Summary of survey results and/or customer base analysis; (4) Proposed financial services to be offered; (5) How and when services are to be implemented; (6) Anticipated corporate credit union staffing and credentials of key employees; (7) Physical facility—office and equipment; (8) Proposed recordkeeping, data processing, and communications systems and/or vendors; (9) Budget for the first three years; (10) Semiannual pro-forma financial statements for the first three years, including a listing of the assumptions used to develop the financial statements; (11) Goals for the number of members and shares under various scenarios; (12) Projected break-even or date of achieving independent operations; (13) Source of funds to pay expenses during the initial setup and early months of operation; (14) Written policies for shares, lending, investments, funds management, capital accumulation as required by Part 704, payment systems, and EDP; (15) Plan for continuity—directors, committee members, and senior management; (16) Evidence of commitment (i.e., letters and/or contracts used to substantiate projections); and (17) Services and marketing strategies for financial and correspondent services, including the ability of the proposed corporate credit union to efficiently deliver these products. IV—Organizing a Corporate Federal Credit Union The subscribers must submit the following documentation to the NCUA Office of Corporate Credit Unions (OCCU) for processing: (1) NCUA Form 4001—Federal Credit Union Investigation Report. (2) NCUA Form 4012—Report of Officials and Agreement to Serve. This form documents general background information for each official and employee of the proposed corporate credit union. Each designee must complete and sign this form. In completing the form, subscribers may disregard any reference to ‘‘common bond.’’ In addition, where Section B.2 of the form requires a potential interest E:\FR\FM\01OCP1.SGM 01OCP1 60655 Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Proposed Rules survey sample of at least 250 potential members, subscribers may use a sample of at least 30 potential members. (3) NCUA Form 4008—Organization Certificate. This document establishes the seven criteria required of subscribers by the Act and is signed by the subscribers and notarized. This document should be executed in duplicate. (4) NCUA Form 9501—Certification of Resolutions. This document certifies the board of the proposed corporate credit union has resolved to apply for federal insurance of member’s accounts and has authorized the chief executive officer and chief financial officer to execute the Application and Agreements for Insurance of Accounts. Both the chief executive officer and recording officer of the proposed corporate credit union must sign this certification. (5) NCUA Form 9500—Application and Agreements for Insurance of Accounts. This document contains agreements FCUs must comply with in order to obtain NCUA insurance coverage of member accounts. The document must be completed and signed by both the chief executive officer and chief financial officer. V—Name Selection It is the responsibility of the corporate FCU organizers to ensure that the proposed corporate FCU name does not constitute an infringement on the name of any corporation in its trade area. This responsibility also includes researching any service marks or trademarks used by any other corporation (including credit unions) in its trade area. NCUA will ensure, to the extent possible, that the corporate credit union’s name: • Is not already being officially used by another FCU; • Will not be confused with NCUA or another federal or state agency, or with another credit union; and • Does not include misleading or inappropriate language. The last three words in the name of every credit union chartered by NCUA must be ‘‘Federal Credit Union.’’ jlentini on DSKJ8SOYB1PROD with PROPOSALS VI—NCUA Review A—General OCCU will conduct an independent investigation of the corporate credit union’s charter application to assess the economic and long-term viability of the proposed corporate credit union. OCCU field staff will conduct the review and, if necessary, perform an on-site contact with selected officials and others having an interest in the proposed corporate credit union. The review will include evaluation of proposed management’s experience and VerDate Mar<15>2010 16:54 Sep 30, 2010 Jkt 223001 suitability, commitment of proposed officials, and assessment of economic viability. OCCU field staff may also be called upon to assist subscribers in the proper completion of required forms and the Organization Certificate—NCUA Form 4008. OCCU field staff will thoroughly analyze the prospective corporate credit union’s business plan for realistic projections, attainable goals, and time commitment. Any concerns will be reviewed with the subscribers and discussed with prospective officials. NCUA will follow the timeline set forth below in processing corporate charter applications: 1. Within 30 days of receipt of the charter package, OCCU field staff will meet with the proposed officials and management team to evaluate the adequacy of management and the information provided and to discuss the FCU’s ability to begin operations and meet their financial projections if the charter is approved. 2. On completion of all required reviews, but no later than 60 days after the meeting described above, OCCU field staff will make a recommendation to the OCCU Director regarding the charter application. The recommendation may include provisional requirements to be completed prior to final approval of a corporate FCU charter. 3. Within 30 days of receiving OCCU field staff recommendation, an OCCU analyst will determine if the application package can be forwarded to the NCUA Board for appropriate action, or if it should be returned to the subscribers. The subscribers will receive written notification of this decision. 4. Within 60 days after receipt of a complete application that addresses all of OCCU’s concerns, the NCUA Board will vote on the proposed charter. If the charter is approved, the officials must sign a ‘‘Letter of Understanding and Agreement’’ (LUA) before the corporate credit union can commence operations. This LUA will impose certain operational restrictions, require compliance with NCUA’s Rules and Regulations and adoption of the standard Corporate FCU Bylaws, and contain several financial performance milestones that the new charter must meet, consistent with Part 704. B—Finalization of New Charter If NCUA approves the charter application, the subscribers, as their final duty, will elect the board of directors for the newly chartered corporate FCU. The new board of directors will subsequently appoint the supervisory committee. The corporate PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 FCU must then submit a report of officials to OCCU. [FR Doc. 2010–24659 Filed 9–30–10; 8:45 am] BILLING CODE 7535–01–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2010–0952; Directorate Identifier 2010–NM–131–AD] RIN 2120–AA64 Airworthiness Directives; Airbus Model A330–201, –202, –203, –223, and –243 Airplanes; Airbus Model A330–300 Series Airplanes; and Airbus Model A340–200 and –300 Series Airplanes Federal Aviation Administration (FAA), DOT. ACTION: Notice of proposed rulemaking (NPRM). AGENCY: We propose to adopt a new airworthiness directive (AD) for the products listed above. This proposed AD results from mandatory continuing airworthiness information (MCAI) originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as: SUMMARY: [T]he FAA published SFAR 88 (Special Federal Aviation Regulation 88). By mail referenced 04/00/02/07/01–L296 of March 4th, 2002 and 04/00/02/07/03–L024 of February 3rd, 2003 the JAA [Joint Aviation Authorities] recommended to the National Aviation Authorities (NAA) the application of a similar regulation. The aim of this regulation is to require * * * a definition review against explosion hazards. * * * * * Failure of the auxiliary power unit (APU) bleed leak detection system could result in overheat of the fuel tank located in the horizontal stabilizer and ignition of the fuel vapors in that tank, which could result in a fuel tank explosion and consequent loss of the airplane. The proposed AD would require actions that are intended to address the unsafe condition described in the MCAI. DATES: We must receive comments on this proposed AD by November 15, 2010. You may send comments by any of the following methods: • Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments. • Fax: (202) 493–2251. ADDRESSES: E:\FR\FM\01OCP1.SGM 01OCP1

Agencies

[Federal Register Volume 75, Number 190 (Friday, October 1, 2010)]
[Proposed Rules]
[Pages 60651-60655]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-24659]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 704

RIN 3133-AD80


Corporate Credit Unions

AGENCY: National Credit Union Administration (NCUA).

ACTION: Proposed Interpretive Ruling and Policy Statement 10-XX.

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SUMMARY: The NCUA Board is proposing to adopt an Interpretive Ruling 
and Policy Statement (IRPS) setting forth the requirements and process 
for chartering corporate federal credit unions.

DATES: Comments must be received on or before November 1, 2010.

ADDRESSES: You may submit comments by any of the following methods 
(Please send comments by one method only):
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     NCUA Web site: http://www.ncua.gov/Resources/RegulationsOpinionsLaws/ProposedRegulations.aspx. Follow the 
instructions for submitting comments.
     E-mail: Address to regcomments@ncua.gov. Include ``[Your

[[Page 60652]]

name] Comments on ``Notice of Proposed Rulemaking for Corporate FCU 
Chartering'' in the e-mail subject line.
     Fax: (703) 518-6319. Use the subject line described above 
for e-mail.
     Mail: Address to Mary Rupp, Secretary of the Board, 
National Credit Union Administration, 1775 Duke Street, Alexandria, 
Virginia 22314-3428.
     Hand Delivery/Courier: Same as mail address.
    Public Inspection: All public comments are available on the 
agency's Web site at http://www.ncua.gov/Resources/RegulationsOpinionsLaws/ProposedRegulations.aspx as submitted, except 
as may not be possible for technical reasons. Public comments will not 
be edited to remove any identifying or contact information. Paper 
copies of comments may be inspected in NCUA's law library at 1775 Duke 
Street, Alexandria, Virginia 22314, by appointment weekdays between 9 
a.m. and 3 p.m. To make an appointment, call (703) 518-6546 or send an 
e-mail to OGCMail@ncua.gov.

FOR FURTHER INFORMATION CONTACT: Lisa Henderson, Staff Attorney, Office 
of General Counsel, at the address above or telephone: (703) 518-6540; 
or Dave Shetler, Deputy Director, Office of Corporate Credit Unions, at 
the address above or telephone: (703) 518-6640.

SUPPLEMENTARY INFORMATION:

A. Background

    NCUA recently finalized changes to its Corporate Credit Union Rule, 
12 CFR part 704. These changes, as well as NCUA's other efforts to 
resolve the problems created by the legacy assets remaining in the 
corporate credit union system, are likely to result in a fundamental 
restructuring of the corporate credit union system. As part of this 
restructuring, NCUA believes that some groups of natural person credit 
unions may wish to form new corporate credit unions.
    NCUA first issued guidance on chartering corporate federal credit 
unions (corporate FCUs) in 1982, but withdrew this guidance and never 
reissued it. See NCUA Interpretive Ruling and Policy Statement (IRPS) 
82-6. In light of the impending changes to the corporate system, NCUA 
is now reissuing chartering guidance in the form of a new proposed 
IRPS. The proposed IRPS explains the requirements for prospective new 
corporate FCUs and NCUA's standards for evaluating applications and 
will assist credit union officials in assessing the feasibility of a 
new corporate charter. The proposed IRPS also lists timeframes for NCUA 
action on corporate charter applications.
    The proposal requires charter applicants submit various information 
to NCUA, including:
     A detailed business plan;
     NCUA Form 4001, the Federal Credit Union Organization 
Report;
     NCUA Forms 9500 and 9501, regarding federal share 
insurance for member accounts;
     NCUA Form 4012, containing key biographical information 
and authorization of a background check and credit check for each 
prospective board member, credit and supervisory committee member, and 
senior management employee; and
     NCUA Form 4008, the credit union's organization 
certificate.
    The proposed IRPS also includes detailed timelines for processing a 
charter application.

B. Comment Period and Charter Applications Submitted Before IRPS Is 
Finalized

    The Board is proposing this IRPS with a 30-day comment period 
rather than NCUA's standard 60-day comment period. The Board believes 
that this proposal is neither novel nor complex, and that 30 days 
should be sufficient for all parties interested in commenting. Any 
charter application submitted before this IRPS is finalized should 
conform to the requirements of the proposed IRPS, and NCUA will process 
applications under the terms of the proposed IRPS until the IRPS is 
finalized. The possibility of impending charter applications further 
supports the Board's perceived need for a shorter comment period and a 
quicker finalization of the IRPS.

C. Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact any proposed regulation may 
have on a substantial number of small entities (those under $10 million 
in assets). The proposed IRPS only applies to corporate credit unions, 
all of which have assets well in excess of $10 million. Accordingly, 
the proposed IRPS 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

    The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in 
which an agency by rule creates a new paperwork burden on regulated 
entities or modifies an existing burden. 44 U.S.C. 3507(d); 5 CFR part 
1320. For purposes of the PRA, a paperwork burden may take the form of 
either a reporting or a recordkeeping requirement, both referred to as 
information collections. The Office of Management and Budget (OMB) has 
approved the current information collection requirements in part 704 
and assigned them control number 3133-0129.
    The proposed IRPS contains an additional information collection in 
the form of an application requirement. Any group of persons creating a 
new federally chartered corporate credit union must apply for NCUA's 
approval. As required by the PRA, NCUA is submitting a copy of this 
proposed IRPS to OMB for its review and approval. Persons interested in 
submitting comments with respect to the information collection aspects 
of the proposed IRPS should submit them to OMB at the address noted 
below.
1. Estimated PRA Burden
    The following describes the application requirements in the 
proposed IRPS that create manhour burdens:
a. Form 4001 and Business Plan
    The proposed IRPS requires applicants for a corporate FCU charter 
to submit Form 4001, which lists the prospective credit union's 
officers, directors and basic information about proposed operations. 
Form 4001 also requires applicants to submit a business plan. For 
corporate credit union charter applications, the business plan must 
address the following items:
     Mission statement;
     Analysis of market conditions (i.e., economic prospects 
for the corporate credit union and availability of proposed financial 
services from alternative depository institutions);
     Summary of survey results and/or customer base analysis;
     Proposed financial services to be offered;
     How and when services are to be implemented;
     Anticipated corporate credit union staffing and 
credentials of key employees;
     Physical facility--office and equipment;
     Proposed recordkeeping, data processing, and 
communications systems and/or vendors;
     Budget for the first three years;
     Semiannual pro-forma financial statements for the first 
three years,

[[Page 60653]]

including a listing of the assumptions used to develop the financial 
statements;
     Goals for the number of members and shares under various 
scenarios;
     Projected break-even or date of achieving independent 
operations;
     Source of funds to pay expenses during the initial setup 
and early months of operation;
     Written policies for shares, lending, investments, funds 
management, capital accumulation as required by part 704, payment 
systems, and EDP;
     Plan for continuity--directors, committee members, and 
senior management;
     Evidence of commitment (i.e., letters and/or contracts 
used to substantiate projections); and
     Services and marketing strategies for financial and 
correspondent services, including the ability of the proposed corporate 
credit union to efficiently deliver these products.
    While the precise time necessary to prepare the business plan will 
vary with the intended complexity and activities of the proposed 
corporate credit union, NCUA estimates that on average, preparation of 
Form 4001 and an acceptable business plan will require 300 hours.
b. Form 4012, Report of Official or Employee
    NCUA requires each prospective board member, members of key 
committees, and senior management employees to submit this form 
providing basic biographical information and authorizing NCUA to 
conduct a background and credit check. Because the form is 
straightforward and applicants are likely to have most of the 
information requested in other formats, such as resumes, NCUA estimates 
completion of the form will take no more than one hour for each 
individual required to submit the form.
c. Forms 9500 and 9501, Insurance Forms
    NCUA requires the prospective chief executive officer and recording 
officer to submit Form 9500 to certify that the prospective board has 
adopted a resolution that the prospective FCU will apply for federal 
share insurance. NCUA requires the chair and the chief financial 
officer to submit Form 9501 to apply for federal share insurance. NCUA 
estimates completion of both these forms will require no more than one 
hour per charter applicant.
d. Form 4008, Organization Certificate
    Prospective organizers must also submit an organization certificate 
listing the credit union's name and names and contact information of 
the initial subscribers. NCUA estimates that collection of the required 
information and completion of this form should require no more than two 
hours per charter applicant.
2. Summary of Collection Burden
    NCUA estimates the total information collection burden represented 
by the proposal, as follows:
    Estimated annual number of respondents: 1 corporate FCU charter 
applicant.
    Preparation of Form 4001 and business plan: 1 charter applicant x 
300 hours = 300 hours.
    Preparation of NCUA Form 4012: 1 charter applicant x 25 individual 
officials, committee members and employees per applicant x 1 hour per 
individual = 25 hours.
    Preparation of NCUA Forms 9500 and 9501: 1 charter applicant x 1 
hour = 1 hour.
    Preparation of NCUA Form 4008: 1 charter applicant x 2 hours = 2 
hours.
    Total estimated annual burden hours: 328 hours.
    The NCUA considers comments by the public on this proposed 
collection of information in:
     Evaluating whether the proposed collection of information 
is necessary for the proper performance of the functions of the NCUA, 
including whether the information will have a practical use;
     Evaluating the accuracy of the NCUA's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology; e.g., permitting 
electronic submission of responses.
    The Paperwork Reduction Act requires OMB to make a decision 
concerning the collection of information contained in the proposed 
regulation between 30 and 60 days after publication of this document in 
the Federal Register. Therefore, a comment to OMB is best assured of 
having its full effect if OMB receives it within 30 days of 
publication. This does not affect the deadline for the public to 
comment to the NCUA on the proposed regulation.
    Comments on the proposed information collection requirements should 
be sent to: Office of Information and Regulatory Affairs, OMB, New 
Executive Office Building, Washington, DC 20503; Attention: NCUA Desk 
Officer, with a copy to Mary Rupp, Secretary of the Board, National 
Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 
22314-3428.

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.
    The proposed IRPS would not have substantial direct effects on the 
states, on the connection 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 IRPS will not affect 
family well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, 1999, Public Law 105-277, 112 
Stat. 2681 (1998).

    By the National Credit Union Administration Board on September 
24, 2010.
Mary F. Rupp,
Secretary of the Board.

    Authority:  12 U.S.C. 1753, 1754, 1758, 1766.

Corporate Federal Credit Union Chartering Guidelines

I--Goals of NCUA Corporate Chartering Guidelines

    These guidelines are intended to achieve the following goals:
     Uphold the provisions of the Federal Credit Union Act 
(Act);
     Promote safety and soundness within the credit union 
industry; and
     Provide quality services to members.
    NCUA will consider the above criteria as the primary factors in 
determining whether to approve a corporate federal credit union (FCU) 
charter. In unusual circumstances, NCUA may consider

[[Page 60654]]

other information in deciding if a charter should be approved, such as 
other federal law or public policies.

II--Subscribers

    Seven or more natural person representatives of natural person 
credit unions (NPCUs)--``the subscribers''--must present to NCUA for 
approval a sworn organization certificate stating at a minimum:
     The name of the proposed corporate FCU;
     The location of the proposed corporate FCU;
     The names and addresses of the subscribers to the 
certificate and the number of shares subscribed by each;
     The initial par value of the shares; and
     The proposed field of membership.
    False statements on any of the required documentation filed in 
obtaining an FCU charter may be grounds for federal criminal 
prosecution.

III--Economic Advisability

A--General

    Before chartering a corporate FCU, NCUA must be satisfied that the 
institution will be viable and that it will provide needed services to 
its members. NCUA will conduct an independent investigation of each 
charter application to ensure that the proposed corporate credit union 
can be successful. In general, the success of any credit union depends 
on: (a) The character and fitness of management; (b) the depth of the 
members' support; and (c) present and projected market conditions.

B--Proposed Management's Character and Fitness

    The Act requires NCUA to ensure that the subscribers of federal 
charters are of good ``general character and fitness.'' In addition, 
employees and officials must be competent, experienced, honest, and of 
good character.
    NCUA will conduct background and credit investigations on 
prospective officials and employees, and the reports must establish 
each applicant's character and ability to effectively handle financial 
matters. Factors that may lead to disapproval of a prospective official 
or employee include criminal convictions, indictments, and acts of 
fraud and dishonesty. Other factors, such as serious or unresolved past 
due credit obligations and bankruptcies disclosed during credit checks, 
may also disqualify an individual.
    NCUA also needs reasonable assurance that the management team will 
have the requisite skills--particularly in leadership, accounting, 
funds management, and payment systems risk--and the commitment to 
dedicate the time and effort needed to make the proposed corporate FCU 
a success.
    Section 701.14 of NCUA's Rules and Regulations sets forth the 
procedures for NCUA approval of officials of newly chartered FCUs, 
including corporate FCUs. If the application of a prospective official 
or employee to serve is not acceptable to NCUA's Director, Office of 
Corporate Credit Unions (OCCU), the group can propose an alternate to 
act in that individual's place. If the charter applicant feels it is 
essential that the disqualified individual be retained, the individual 
may appeal the OCCU's decision to the NCUA Board. If an appeal is 
pursued, action on the application may be delayed. If the appeal is 
denied by the NCUA Board, an applicant acceptable to NCUA must be 
provided before the charter can be approved.

C--Member Support

    An important chartering consideration is the degree of support from 
the field of membership. The charter applicant must demonstrate a 
sufficient customer base from which to draw business in the form of 
membership applications, capital and share commitments, and commitments 
to use the corporate FCU's services. The applicant must provide surveys 
and/or written commitments certifying to this potential membership base 
and capital commitment to the levels required by Part 704 of NCUA's 
Rules and Regulations. Although NCUA may work with a newly chartered 
corporate on a plan to meet the retained earnings requirements of Part 
704, the newly chartered corporate must have a viable plan to solicit 
and maintain sufficient contributed capital. Generally, the plan must 
show how the corporate FCU will keep its total capital at 4 percent or 
more of its moving daily average net assets at all times beginning on 
the date NCUA issues the charter.

D--Present and Future Market Conditions--Business Plan

    The ability to provide effective service to members, compete in the 
marketplace, and adapt to changing market conditions are key to the 
survival of any enterprise. Before NCUA will charter a corporate credit 
union, a charter applicant must submit a business plan based on 
realistic and supportable projections and assumptions. The business 
plan should contain, at a minimum, the following elements:
    (1) Mission statement;
    (2) Analysis of market conditions (i.e., economic prospects for the 
corporate credit union and availability of proposed financial services 
from alternative depository institutions);
    (3) Summary of survey results and/or customer base analysis;
    (4) Proposed financial services to be offered;
    (5) How and when services are to be implemented;
    (6) Anticipated corporate credit union staffing and credentials of 
key employees;
    (7) Physical facility--office and equipment;
    (8) Proposed recordkeeping, data processing, and communications 
systems and/or vendors;
    (9) Budget for the first three years;
    (10) Semiannual pro-forma financial statements for the first three 
years, including a listing of the assumptions used to develop the 
financial statements;
    (11) Goals for the number of members and shares under various 
scenarios;
    (12) Projected break-even or date of achieving independent 
operations;
    (13) Source of funds to pay expenses during the initial setup and 
early months of operation;
    (14) Written policies for shares, lending, investments, funds 
management, capital accumulation as required by Part 704, payment 
systems, and EDP;
    (15) Plan for continuity--directors, committee members, and senior 
management;
    (16) Evidence of commitment (i.e., letters and/or contracts used to 
substantiate projections); and
    (17) Services and marketing strategies for financial and 
correspondent services, including the ability of the proposed corporate 
credit union to efficiently deliver these products.

IV--Organizing a Corporate Federal Credit Union

    The subscribers must submit the following documentation to the NCUA 
Office of Corporate Credit Unions (OCCU) for processing:
    (1) NCUA Form 4001--Federal Credit Union Investigation Report.
    (2) NCUA Form 4012--Report of Officials and Agreement to Serve. 
This form documents general background information for each official 
and employee of the proposed corporate credit union. Each designee must 
complete and sign this form. In completing the form, subscribers may 
disregard any reference to ``common bond.'' In addition, where Section 
B.2 of the form requires a potential interest

[[Page 60655]]

survey sample of at least 250 potential members, subscribers may use a 
sample of at least 30 potential members.
    (3) NCUA Form 4008--Organization Certificate. This document 
establishes the seven criteria required of subscribers by the Act and 
is signed by the subscribers and notarized. This document should be 
executed in duplicate.
    (4) NCUA Form 9501--Certification of Resolutions. This document 
certifies the board of the proposed corporate credit union has resolved 
to apply for federal insurance of member's accounts and has authorized 
the chief executive officer and chief financial officer to execute the 
Application and Agreements for Insurance of Accounts. Both the chief 
executive officer and recording officer of the proposed corporate 
credit union must sign this certification.
    (5) NCUA Form 9500--Application and Agreements for Insurance of 
Accounts. This document contains agreements FCUs must comply with in 
order to obtain NCUA insurance coverage of member accounts. The 
document must be completed and signed by both the chief executive 
officer and chief financial officer.

V--Name Selection

    It is the responsibility of the corporate FCU organizers to ensure 
that the proposed corporate FCU name does not constitute an 
infringement on the name of any corporation in its trade area. This 
responsibility also includes researching any service marks or 
trademarks used by any other corporation (including credit unions) in 
its trade area. NCUA will ensure, to the extent possible, that the 
corporate credit union's name:
     Is not already being officially used by another FCU;
     Will not be confused with NCUA or another federal or state 
agency, or with another credit union; and
     Does not include misleading or inappropriate language.
    The last three words in the name of every credit union chartered by 
NCUA must be ``Federal Credit Union.''

VI--NCUA Review

A--General

    OCCU will conduct an independent investigation of the corporate 
credit union's charter application to assess the economic and long-term 
viability of the proposed corporate credit union. OCCU field staff will 
conduct the review and, if necessary, perform an on-site contact with 
selected officials and others having an interest in the proposed 
corporate credit union.
    The review will include evaluation of proposed management's 
experience and suitability, commitment of proposed officials, and 
assessment of economic viability. OCCU field staff may also be called 
upon to assist subscribers in the proper completion of required forms 
and the Organization Certificate--NCUA Form 4008.
    OCCU field staff will thoroughly analyze the prospective corporate 
credit union's business plan for realistic projections, attainable 
goals, and time commitment. Any concerns will be reviewed with the 
subscribers and discussed with prospective officials.
    NCUA will follow the timeline set forth below in processing 
corporate charter applications:
    1. Within 30 days of receipt of the charter package, OCCU field 
staff will meet with the proposed officials and management team to 
evaluate the adequacy of management and the information provided and to 
discuss the FCU's ability to begin operations and meet their financial 
projections if the charter is approved.
    2. On completion of all required reviews, but no later than 60 days 
after the meeting described above, OCCU field staff will make a 
recommendation to the OCCU Director regarding the charter application. 
The recommendation may include provisional requirements to be completed 
prior to final approval of a corporate FCU charter.
    3. Within 30 days of receiving OCCU field staff recommendation, an 
OCCU analyst will determine if the application package can be forwarded 
to the NCUA Board for appropriate action, or if it should be returned 
to the subscribers. The subscribers will receive written notification 
of this decision.
    4. Within 60 days after receipt of a complete application that 
addresses all of OCCU's concerns, the NCUA Board will vote on the 
proposed charter. If the charter is approved, the officials must sign a 
``Letter of Understanding and Agreement'' (LUA) before the corporate 
credit union can commence operations. This LUA will impose certain 
operational restrictions, require compliance with NCUA's Rules and 
Regulations and adoption of the standard Corporate FCU Bylaws, and 
contain several financial performance milestones that the new charter 
must meet, consistent with Part 704.

B--Finalization of New Charter

    If NCUA approves the charter application, the subscribers, as their 
final duty, will elect the board of directors for the newly chartered 
corporate FCU. The new board of directors will subsequently appoint the 
supervisory committee. The corporate FCU must then submit a report of 
officials to OCCU.
[FR Doc. 2010-24659 Filed 9-30-10; 8:45 am]
BILLING CODE 7535-01-P