Investment and Deposit Activities-Bank Notes, 17601-17602 [2016-07151]

Download as PDF 17601 Rules and Regulations Federal Register Vol. 81, No. 61 Wednesday, March 30, 2016 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. Prices of new books are listed in the first FEDERAL REGISTER issue of each week. NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 703 RIN 3133–AE55 Investment and Deposit Activities— Bank Notes National Credit Union Administration (NCUA). ACTION: Final rule. AGENCY: The NCUA Board (Board) is finalizing a rule that amends the maturity requirement for bank notes to be permissible investments for federal credit unions (FCUs) by removing the word ‘‘original’’ from the current requirement that bank notes have ‘‘original weighted average maturities of less than 5 years.’’ DATES: This rule is effective April 29, 2016. FOR FURTHER INFORMATION CONTACT: John Nilles, Senior Capital Markets Specialist, Office of Examination and Insurance, at the above address or telephone (703) 518–6360; or Justin M. Anderson, Senior Staff Attorney, Office of General Counsel, at the above address or telephone (703) 518–6540. SUPPLEMENTARY INFORMATION: SUMMARY: Table of Contents asabaliauskas on DSK3SPTVN1PROD with RULES I. Background II. Comments on the October 2015 Proposal III. Final Rule IV. Regulatory Procedures I. Background In October 2015, the Board issued a proposed rule to amend the maturity requirement for bank notes to be permissible investments for FCUs by removing the word ‘‘original’’ from the requirement that bank notes have ‘‘original weighted average maturities of less than 5 years.’’ 1 As the Board noted 1 80 FR 63932 (Oct. 22, 2015). VerDate Sep<11>2014 16:23 Mar 29, 2016 Jkt 238001 in the proposal, the authority for FCUs to invest in bank notes is derived from the provision in the Federal Credit Union Act (the Act) that permits FCUs to make deposits in, among other things, national and state banks. The Act does not provide authority for FCUs to purchase bank notes that are not deposits. The Act, however, does not define ‘‘deposit.’’ NCUA’s longstanding policy has been to use the definition of deposit in the Federal Reserve Board’s Regulation D. Regulation D provides, in relevant part, that a liability of a depository institution can be a ‘‘deposit’’ if, among other things: (1) It is insured; (2) it is not subordinated to the claims of depositors; and (3) it has a weighted average maturity of less than five years.2 The Board stated in the proposal that removing the word ‘‘original’’ would better align NCUA’s requirements for bank notes with the Regulation D definition of a deposit. Further, the Board noted that this amendment would also provide FCUs with some measure of regulatory relief. By removing the word ‘‘original,’’ which ties the bank note’s maturity to its original date of issuance, FCUs will be permitted to select from a much larger pool of possible bank note offerings. Specifically, FCUs will be permitted to purchase bank notes that had original maturities of greater than five years but have remaining maturities of less than five years. Expanding the list of permissible offerings for FCUs will result in: (1) Cheaper execution prices; (2) flexibility for FCUs; and (3) greater efficiency for FCUs in finding suitable offerings. The weighted average maturity of less than five years will also maintain safety and soundness by avoiding excessive interest rate risk. suggested that, because there is no statutory requirement for the Board to align the definition of deposit with Regulation D, the Board should define deposit in a way that would allow FCUs to invest in bank notes with any maturities. However, the Federal Reserve Board’s Regulation D definition provides sufficient flexibility for FCUs, and maintains safety and soundness in this context. The Board, therefore, will continue to follow NCUA’s longstanding policy to use the definition of deposit in Regulation D to determine permissible bank notes that may be purchased by FCUs under the Act. Another commenter requested the Board issue guidance on concentration limits for FCUs investing in bank notes. The Board notes that there are no regulatory concentration limits on bank notes due to the limited exposure to FCUs that the asset class currently represents. A final commenter suggested the Board authorize additional investments for FCUs under part 703. This comment raises an issue that is outside the scope of this rulemaking. However, part 703 was included in the Office of General Counsel’s review of one-third of NCUA’s regulations in 2015. As a result, the Board is considering whether additional amendments to part 703 are warranted. If the Board determines to promulgate such amendments, it will do so in a separate rulemaking. II. Comments on the October 2015 Proposal The Board received eight comment letters in response to the October 2015 proposal. Generally, all of the commenters supported the rule as proposed. Several of those commenters, however, suggested ways to improve the rule. One commenter suggested the Board eliminate the maturity requirement for bank notes completely. This commenter The Regulatory Flexibility Act requires NCUA to prepare an analysis of any significant economic impact a regulation may have on a substantial number of small entities (primarily those under $100 million in assets).3 This final rule will have a minimal economic impact on small credit unions as bank notes are just one small fraction of a typical investment portfolio. Accordingly, NCUA certifies the rule will not have a significant economic impact on a substantial number of small credit unions. 2 NCUA’s regulations do not require that all of these criteria be met for bank notes to be permissible investments. PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 III. Final Rule For the reasons stated above, the Board is adopting as final the proposed amendment without change. IV. Regulatory Procedures 1. Regulatory Flexibility Act 35 U.S.C. 603(a); 12 U.S.C. 1787(c)(1). E:\FR\FM\30MRR1.SGM 30MRR1 17602 Federal Register / Vol. 81, No. 61 / Wednesday, March 30, 2016 / Rules and Regulations 2. Paperwork Reduction Act § 703.14 The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in which an agency by rule creates a new paperwork burden or increases an existing burden.4 For purposes of the PRA, a paperwork burden may take the form of a reporting or recordkeeping requirement, both referred to as information collections. This final rule creates new investment options for FCUs but will not create any new burdens or increase any existing burdens. Therefore, a PRA analysis is not required. ■ 3. Executive Order 13132 Amendment of Class D Airspace and Class E Airspace for the Following New York Towns; Ithaca, NY; Poughkeepsie, NY Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order to adhere to fundamental federalism principles. The final rule does 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, therefore, determined that this final rule does not constitute a policy that has federalism implications for purposes of the executive order. 4. Assessment of Federal Regulations and Policies on Families NCUA has determined that this final rule 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). List of Subjects 12 CFR Part 703 Credit unions, Investments. By the National Credit Union Administration Board on March 24, 2016. Gerard Poliquin, Secretary of the Board. asabaliauskas on DSK3SPTVN1PROD with RULES For the reasons discussed above, the National Credit Union Administration amends 12 CFR part 703 as follows: PART 703—INVESTMENT AND DEPOSIT ACTIVITIES [Amended] Authority for This Rulemaking 2. Amend § 703.14(f)(5) by removing the word ‘‘original’’. [FR Doc. 2016–07151 Filed 3–29–16; 8:45 am] BILLING CODE 7535–01–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 71 [Docket No. FAA–2015–4532; Airspace Docket No. 15–AEA–10] Federal Aviation Administration (FAA), DOT. ACTION: Final rule; delay of effective date, correction. AGENCY: This action changes the effective date of a final rule published in the Federal Register of February 4, 2016, amending Class E Airspace designated as an extension at Ithaca Tompkins Regional Airport, Ithaca, NY; and the Kingston VORTAC, Poughkeepsie, NY. This correction updates the geographic coordinates of each navigation aid and Ithaca Tompkins Regional Airport (formerly Tompkins County Airport), under Class D airspace and Class E surface area airspace to coincide with the FAA’s aeronautical database. Also, Dutchess County Airport is added to the Kingston VORTAC, Poughkeepsie, NY, designation in Class E airspace designated as an extension. The Kingston VORTAC reference is removed from the Class D airspace designation. This action also adds Class D airspace to the title of this rulemaking. DATES: This correction is effective 0901 UTC, May 26, 2016, and the effective date of the rule amending 14 CFR part 71, published on February 4, 2016 (81 FR 5902), is delayed to 0901 UTC May 26, 2016. The Director of the Federal Register approves this incorporation by reference action under Title 1, Code of Federal Regulations, part 51, subject to the annual revision of FAA Order 7400.9 and publication of conforming amendments. SUMMARY: John Fornito, Operations Support Group, Eastern Service Center, Federal Aviation Administration, P.O. Box 20636, Atlanta, Georgia 30320; telephone (404) 305–6364. SUPPLEMENTARY INFORMATION: FOR FURTHER INFORMATION CONTACT: 1. The authority citation for part 703 continues to read as follows: ■ Authority: 12 U.S.C. 1757(7), 1757(8), and 1757(15). 4 44 U.S.C. 3507(d); 5 CFR part 1320. VerDate Sep<11>2014 16:23 Mar 29, 2016 Jkt 238001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 History The Federal Register published a final rule amending Class E Airspace Designated as an Extension at Ithaca Tompkins Regional Airport, Ithaca, NY, (formerly Tompkins County Airport), and the Kingston VORTAC, Poughkeepsie, NY (81 FR 5902, February 4, 2016) Docket No. FAA– 2015–4532. Further review revealed the geographic coordinates for the airport and navaids needed to be amended in Class D airspace and Class E surface area airspace. It is also noted that the Kingston VORTAC is erroneously listed in Class D airspace for Poughkeepsie, NY, and is removed. Also, Class D Airspace is added to the title. Class D and Class E airspace designations are published in paragraphs 5000, 6002, and 6004, respectively, of FAA Order 7400.9Z dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR part 71.1. The Class D and Class E airspace designations listed in this document will be published subsequently in the Order. These are administrative corrections and do not affect the controlled airspace boundaries or operating requirements supporting operations in the Ithaca and Poughkeepsie, NY areas. Availability and Summary of Documents for Incorporation by Reference This document amends FAA Order 7400.9Z, Airspace Designations and Reporting Points, dated August 6, 2015, and effective September 15, 2015. FAA Order 7400.9Z lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points. Correction to Final Rule Accordingly, pursuant to the authority delegated to me, in the Federal Register of February 4, 2016 (81 FR 5902) FR Doc. FAA–2016–02040, Amendment of Class E Airspace for the following NY Towns; Ithaca, NY; Poughkeepsie, NY, is corrected as follows: On page 5902, column 2, beginning on line 6, remove the following text: ‘‘Amendment of Class E Airspace for the following New York Towns; Ithaca, NY; Poughkeepsie, NY’’ and add in its place ‘‘Amendment of Class D and E Airspace for the following New York Towns; Ithaca, NY, Poughkeepsie, NY On page 5903, column 2, after line 23, add the following text: Paragraph 5000 Class D Airspace. * * E:\FR\FM\30MRR1.SGM * * 30MRR1 *

Agencies

[Federal Register Volume 81, Number 61 (Wednesday, March 30, 2016)]
[Rules and Regulations]
[Pages 17601-17602]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-07151]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 
Prices of new books are listed in the first FEDERAL REGISTER issue of each 
week.

========================================================================


Federal Register / Vol. 81, No. 61 / Wednesday, March 30, 2016 / 
Rules and Regulations

[[Page 17601]]



NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 703

RIN 3133-AE55


Investment and Deposit Activities--Bank Notes

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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

SUMMARY: The NCUA Board (Board) is finalizing a rule that amends the 
maturity requirement for bank notes to be permissible investments for 
federal credit unions (FCUs) by removing the word ``original'' from the 
current requirement that bank notes have ``original weighted average 
maturities of less than 5 years.''

DATES: This rule is effective April 29, 2016.

FOR FURTHER INFORMATION CONTACT: John Nilles, Senior Capital Markets 
Specialist, Office of Examination and Insurance, at the above address 
or telephone (703) 518-6360; or Justin M. Anderson, Senior Staff 
Attorney, Office of General Counsel, at the above address or telephone 
(703) 518-6540.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Background
II. Comments on the October 2015 Proposal
III. Final Rule
IV. Regulatory Procedures

I. Background

    In October 2015, the Board issued a proposed rule to amend the 
maturity requirement for bank notes to be permissible investments for 
FCUs by removing the word ``original'' from the requirement that bank 
notes have ``original weighted average maturities of less than 5 
years.'' \1\ As the Board noted in the proposal, the authority for FCUs 
to invest in bank notes is derived from the provision in the Federal 
Credit Union Act (the Act) that permits FCUs to make deposits in, among 
other things, national and state banks.
---------------------------------------------------------------------------

    \1\ 80 FR 63932 (Oct. 22, 2015).
---------------------------------------------------------------------------

    The Act does not provide authority for FCUs to purchase bank notes 
that are not deposits. The Act, however, does not define ``deposit.'' 
NCUA's long-standing policy has been to use the definition of deposit 
in the Federal Reserve Board's Regulation D. Regulation D provides, in 
relevant part, that a liability of a depository institution can be a 
``deposit'' if, among other things: (1) It is insured; (2) it is not 
subordinated to the claims of depositors; and (3) it has a weighted 
average maturity of less than five years.\2\
---------------------------------------------------------------------------

    \2\ NCUA's regulations do not require that all of these criteria 
be met for bank notes to be permissible investments.
---------------------------------------------------------------------------

    The Board stated in the proposal that removing the word 
``original'' would better align NCUA's requirements for bank notes with 
the Regulation D definition of a deposit. Further, the Board noted that 
this amendment would also provide FCUs with some measure of regulatory 
relief. By removing the word ``original,'' which ties the bank note's 
maturity to its original date of issuance, FCUs will be permitted to 
select from a much larger pool of possible bank note offerings. 
Specifically, FCUs will be permitted to purchase bank notes that had 
original maturities of greater than five years but have remaining 
maturities of less than five years. Expanding the list of permissible 
offerings for FCUs will result in: (1) Cheaper execution prices; (2) 
flexibility for FCUs; and (3) greater efficiency for FCUs in finding 
suitable offerings. The weighted average maturity of less than five 
years will also maintain safety and soundness by avoiding excessive 
interest rate risk.

II. Comments on the October 2015 Proposal

    The Board received eight comment letters in response to the October 
2015 proposal. Generally, all of the commenters supported the rule as 
proposed. Several of those commenters, however, suggested ways to 
improve the rule.
    One commenter suggested the Board eliminate the maturity 
requirement for bank notes completely. This commenter suggested that, 
because there is no statutory requirement for the Board to align the 
definition of deposit with Regulation D, the Board should define 
deposit in a way that would allow FCUs to invest in bank notes with any 
maturities. However, the Federal Reserve Board's Regulation D 
definition provides sufficient flexibility for FCUs, and maintains 
safety and soundness in this context. The Board, therefore, will 
continue to follow NCUA's long-standing policy to use the definition of 
deposit in Regulation D to determine permissible bank notes that may be 
purchased by FCUs under the Act.
    Another commenter requested the Board issue guidance on 
concentration limits for FCUs investing in bank notes. The Board notes 
that there are no regulatory concentration limits on bank notes due to 
the limited exposure to FCUs that the asset class currently represents.
    A final commenter suggested the Board authorize additional 
investments for FCUs under part 703. This comment raises an issue that 
is outside the scope of this rulemaking. However, part 703 was included 
in the Office of General Counsel's review of one-third of NCUA's 
regulations in 2015. As a result, the Board is considering whether 
additional amendments to part 703 are warranted. If the Board 
determines to promulgate such amendments, it will do so in a separate 
rulemaking.

III. Final Rule

    For the reasons stated above, the Board is adopting as final the 
proposed amendment without change.

IV. Regulatory Procedures

1. Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
of any significant economic impact a regulation may have on a 
substantial number of small entities (primarily those under $100 
million in assets).\3\ This final rule will have a minimal economic 
impact on small credit unions as bank notes are just one small fraction 
of a typical investment portfolio. Accordingly, NCUA certifies the rule 
will not have a significant economic impact on a substantial number of 
small credit unions.
---------------------------------------------------------------------------

    \3\ 5 U.S.C. 603(a); 12 U.S.C. 1787(c)(1).

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

[[Page 17602]]

2. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in 
which an agency by rule creates a new paperwork burden or increases an 
existing burden.\4\ For purposes of the PRA, a paperwork burden may 
take the form of a reporting or recordkeeping requirement, both 
referred to as information collections. This final rule creates new 
investment options for FCUs but will not create any new burdens or 
increase any existing burdens. Therefore, a PRA analysis is not 
required.
---------------------------------------------------------------------------

    \4\ 44 U.S.C. 3507(d); 5 CFR part 1320.
---------------------------------------------------------------------------

3. Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. 
NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), 
voluntarily complies with the executive order to adhere to fundamental 
federalism principles. The final rule does 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, 
therefore, determined that this final rule does not constitute a policy 
that has federalism implications for purposes of the executive order.

4. Assessment of Federal Regulations and Policies on Families

    NCUA has determined that this final rule 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).

List of Subjects

12 CFR Part 703

    Credit unions, Investments.

    By the National Credit Union Administration Board on March 24, 
2016.
Gerard Poliquin,
Secretary of the Board.

    For the reasons discussed above, the National Credit Union 
Administration amends 12 CFR part 703 as follows:

PART 703--INVESTMENT AND DEPOSIT ACTIVITIES

0
1. The authority citation for part 703 continues to read as follows:

    Authority: 12 U.S.C. 1757(7), 1757(8), and 1757(15).

Sec.  703.14  [Amended]

0
2. Amend Sec.  703.14(f)(5) by removing the word ``original''.

[FR Doc. 2016-07151 Filed 3-29-16; 8:45 am]
BILLING CODE 7535-01-P