80 FR 27109 - Share Insurance and Appendix
NATIONAL CREDIT UNION ADMINISTRATION Federal Register Volume 80, Issue 91 (May 12, 2015)
Federal Register Volume 80, Issue 91 (May 12, 2015)
| Page Range | 27109-27114 | |
| FR Document | 2015-10553 |
[Federal Register Volume 80, Number 91 (Tuesday, May 12, 2015)] [Proposed Rules] [Pages 27109-27114] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-10553] ----------------------------------------------------------------------- NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 745 RIN 3133-AE49 Share Insurance and Appendix AGENCY: National Credit Union Administration (NCUA). ACTION: Proposed rule. ----------------------------------------------------------------------- SUMMARY: The NCUA Board (Board) proposes to amend its share insurance regulations to implement statutory [[Page 27110]] amendments to the Federal Credit Union Act (FCU Act) resulting from the recent enactment of the Credit Union Share Insurance Fund Parity Act (Insurance Parity Act). The statutory amendments require NCUA to provide enhanced, pass-through share insurance for interest on lawyers trust accounts (IOLTA) and other similar escrow accounts. As its name implies, the Insurance Parity Act ensures that NCUA and the Federal Deposit Insurance Corporation (FDIC) insure IOLTAs and other similar escrow accounts in an equivalent manner. DATES: Comments must be received on or before July 13, 2015. 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/Legal/Regs/Pages/PropRegs.aspx. Follow the instructions for submitting comments. Email: Address to [email protected]. Include ``[Your name] Comments on Proposed Rule--Part 745'' in the email subject line. Fax: (703) 518-6319. Use the subject line described above for email. Mail: Address to Gerard Poliquin, Secretary of the Board, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428. Hand Delivery/Courier: Same as mail address. Public Inspection: You may view all public comments on NCUA's Web site at http://www.ncua.gov/Legal/Regs/Pages/PropRegs.aspx as submitted, except for those we cannot post for technical reasons. NCUA will not edit or remove any identifying or contact information from the public comments submitted. You may inspect paper copies of comments 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 email to [email protected]. FOR FURTHER INFORMATION CONTACT: Frank Kressman, Associate General Counsel, Office of General Counsel, at the above address or telephone (703) 518-6540. SUPPLEMENTARY INFORMATION: I. Background II. Summary of the Proposed Rule III. Regulatory Procedures I. Background A. History of IOLTAs According to the National Association of IOLTA Programs (NAIP),\1\ IOLTA programs began in Australia and Canada in the late 1960s to generate funds for legal services to the poor.\2\ In the United States, Congress passed legislation in the 1980s permitting the establishment of certain interest-bearing checking accounts,\3\ which, among many things, helped to enable the creation of IOLTA accounts throughout the United States. The various states operate IOLTA programs pursuant to their own laws.\4\ --------------------------------------------------------------------------- \1\ The NAIP was established in 1986 to enhance legal services for the poor and for the administration of justice through the growth and development of IOLTA programs. http://www.iolta.org/about-naip. \2\ http://www.iolta.org/what-is-iolta/iolta-history. \3\ The Depository Institutions Deregulation and Monetary Control Act of 1980 (Pub. L. 96-221; 94 Stat. 132). \4\ http://www.americanbar.org/groups/interest_lawyers_trust_accounts/resources/status_of_iolta_programs.html. As determined by each state, an IOLTA program may be mandatory, voluntary, or an attorney may opt out of the program. --------------------------------------------------------------------------- Under an IOLTA program, an attorney or law firm may establish an account at one or more financial institutions to hold their clients' funds to pay for legal services or for other purposes. An attorney or a law firm would deposit clients' funds in one or more IOLTAs and hold these funds in trust until needed. Typically, the interest or dividends on IOLTAs are donated to charities or other 501(c)(3) tax exempt organizations pursuant to state law. Generally, the donated funds are used to subsidize legal aid services or for other charitable purposes. B. The Credit Union Share Insurance Fund Parity Act of 2014 On December 18, 2014, President Obama signed into law the Insurance Parity Act.\5\ The Insurance Parity Act amended the share insurance provisions of the FCU Act by requiring enhanced, pass-through share insurance coverage for IOLTAs and other similar escrow accounts.\6\ The Insurance Parity Act specifically defines ``pass-through share insurance,'' with respect to IOLTAs and other similar escrow accounts, as ``insurance coverage based on the interest of each person on whose behalf funds are held in such accounts by the attorney administering the IOLTA or the escrow agent administering a similar escrow account, in accordance with regulations issued by [NCUA].'' \7\ --------------------------------------------------------------------------- \5\ Public Law 113-252, 128 Stat. 2893 (2014). \6\ 12 U.S.C. 1787(k). \7\ Public Law 113-252, 128 Stat. 2893 (2014). --------------------------------------------------------------------------- The Insurance Parity Act defines an IOLTA as ``a system in which lawyers place certain client funds in interest-bearing or dividend- bearing accounts, with the interest or dividends then used to fund programs such as legal service organizations who provide services to clients in need.'' \8\ Pursuant to the Insurance Parity Act, IOLTAs are treated as escrow accounts for share insurance purposes. Further, IOLTAs and other similar escrow accounts are considered member accounts if the attorney administering the IOLTA or the escrow agent administering the escrow account is a member of the insured credit union in which the funds are held.\9\ --------------------------------------------------------------------------- \8\ Id. \9\ The Insurance Parity Act also emphasizes that its amendments to the FCU Act do not authorize an insured credit union to accept deposits of an IOLTA or similar escrow account in an amount greater than such credit union is authorized to accept under any other provisions of federal or state law. --------------------------------------------------------------------------- C. Comparison of FDIC's and NCUA's Current Insurance Regulations Regarding IOLTAs The FDIC's deposit insurance regulations \10\ do not specifically mention IOLTAs by name. Rather, the FDIC insures an IOLTA as an agent or nominee account. To be insured by the FDIC, an agent or nominee account like an IOLTA must expressly disclose, by way of specific reference, the existence of any fiduciary relationship such as an agent or nominee pursuant to which funds are deposited into a bank account and on which a claim for deposit insurance coverage is based. The FDIC has stated that such an account, including an IOLTA, must disclose that the funds are held by the nominal account holder on the behalf of others.\11\ To be insurable, the FDIC must be able to ascertain the interests of the other parties in the IOLTA from the records of the insured depository institution or from the records of the lawyer.\12\ Funds attributable to each client will be insured on a pass-through basis if this recordkeeping requirement is satisfied.\13\ --------------------------------------------------------------------------- \10\ 12 CFR part 330. \11\ FDIC Opinion Letter No. 98-2 (June 16, 1998) at https://www.fdic.gov/regulations/laws/rules/4000-9940.html. \12\ Id. \13\ Id. --------------------------------------------------------------------------- Prior to the enactment of the Insurance Parity Act, NCUA's position with respect to the insurability of IOLTAs was very similar to FDIC's, except that NCUA's coverage was limited only to those clients of the attorney who were also members of the insured credit union in which the IOLTA was kept. This was due to the FCU Act's general limitation to insure only member accounts, with some [[Page 27111]] exceptions not relevant to this discussion. Federally insured credit unions believed they were placed at a competitive disadvantage because of this treatment. With the enactment of the Insurance Parity Act, however, this disadvantage has been removed. Specifically, provided the lawyer administering the IOLTA or the escrow agent administering a similar escrow account is a member of the insured credit union in which such account is maintained, then the interests of each client or principal, regardless of that person's membership status, on whose behalf funds are being held in such accounts by the lawyer or escrow agent, will be insured on a pass- through basis in accordance with the limits in part 745 of NCUA's regulations. In an IOLTA and other similar escrow accounts, the true owners of the funds are the clients and principals. The lawyers or law firms and the escrow agents are only agents holding the funds on the clients' and principal's behalf. II. Summary of the Proposed Rule A. Why is NCUA issuing this rule as a proposal? The language of the Insurance Parity Act clearly states that NCUA shall provide pass-through share insurance for IOLTAs, and it defines what an IOLTA is. Given this level of clarity, NCUA takes the position that share insurance coverage for IOLTAs is currently in place and has been since the enactment of the Insurance Parity Act, even without any regulatory action on NCUA's part. No implementing regulations are required to effect this aspect of the legislation. However, other aspects of the legislation do require NCUA to take regulatory action. Additionally, some of the language in the Insurance Parity Act is ambiguous and leaves unanswered certain questions. For example, these questions include: What escrow accounts should be included in the category ``other similar escrow accounts'' as that phrase is used in the Insurance Parity Act? Should prepaid card programs, such as payroll cards, be considered IOLTAs or other similar escrow accounts for share insurance purposes? What recordkeeping requirements must be satisfied to receive share insurance on IOLTAs and other similar escrow accounts? Does the enhanced share insurance coverage provided by the Insurance Parity Act affect the Bank Secrecy Act (BSA) requirements for insured credit unions? Should nonmember funds kept in a federal credit union as a result of the enhanced share insurance coverage provided by the Insurance Parity Act count towards a federal credit union's limit on the receipt of payments on shares from nonmembers pursuant to Sec. 701.32 of NCUA's regulations? As discussed below in this rulemaking, NCUA analyzes the above questions and proposes how each should be addressed. NCUA seeks public comment on alternative interpretations of the Insurance Parity Act and alternative regulatory approaches that commenters believe are appropriate and beneficial. However, NCUA reiterates that despite the proposed nature of this rulemaking, IOLTA share insurance coverage is currently in place and will remain in place regardless of the direction any subsequent final rule may take. B. Pass-Through Share Insurance for IOLTAs and Other Similar Escrow Accounts As noted above, the Insurance Parity Act defines ``pass-through share insurance,'' with respect to IOLTAs and other similar escrow accounts, as ``insurance coverage based on the interest of each person on whose behalf funds are held in such accounts by the attorney administering the IOLTA or the escrow agent administering a similar escrow account, in accordance with regulations issued by [NCUA].\14\ NCUA believes this definition is clear and accurate. Also, it is consistent with how NCUA currently defines ``pass-through share insurance'' in its share insurance regulations relating to coverage of certain employee benefit plans.\15\ NCUA proposes to adopt this statutory definition of ``pass-through share insurance'' as the regulatory definition of that term in part 745. --------------------------------------------------------------------------- \14\ Public Law 113-252, 128 Stat. 2893 (2014). \15\ 12 U.S.C. 1787(k)(4); 12 CFR 745.9-2. --------------------------------------------------------------------------- C. What escrow accounts should be included in the category ``other similar escrow accounts'' as that phrase is used in the Insurance Parity Act? The Insurance Parity Act provides that, for share insurance purposes, IOLTAs are treated as escrow accounts. It also provides that pass-through insurance coverage is available for other kinds of escrow accounts that are similar to IOLTAs. However, the Insurance Parity Act does not define or further describe what constitutes an escrow account that is ``similar'' to an IOLTA. The Insurance Parity Act defines an IOLTA as ``a system in which lawyers place certain client funds in interest-bearing or dividend-bearing accounts, with the interest or dividends then used to fund programs such as legal service organizations who provide services to clients in need.'' NCUA is tasked with defining the kinds of escrow accounts that are similar enough to IOLTAs to be eligible for pass-through share insurance as discussed above. NCUA acknowledges the challenge to describe with precision the circumstances under which such coverage should be provided. There are many different kinds of escrow accounts in use with varying forms and structures. Also, ``similar'' is a relative term that may necessitate NCUA reviewing escrow accounts with varying structures on a case-by-case basis to determine which are similar enough to IOLTAs to receive pass-through insurance coverage. Despite the amorphous nature of escrow accounts, NCUA believes it is important to provide insured credit unions with as much regulatory clarity and certainty as possible about which escrow accounts are considered similar enough to IOLTAs to receive pass-through insurance coverage. NCUA seeks to avoid, to the greatest extent possible, the need to make case-by-case analyses of escrow accounts as that process is labor intensive and inefficient, and it creates uncertainty for insured credit unions. There are some escrow accounts whose nature and structure are immediately recognizable as similar to an IOLTA. For example, typical realtor escrow accounts and prepaid funeral accounts have attributes that, while not identical to IOLTAs, are similar to IOLTAs and should be entitled to pass-through share insurance coverage. One of the signature characteristics common to typical realtor accounts, prepaid funeral accounts, and IOLTAs is that each of these kinds of account has a licensed professional or other individual serving in a fiduciary capacity and holding funds for the benefit of a client as part of some transaction or business relationship. Accordingly, at a minimum, NCUA proposes to extend pass-through share insurance coverage to escrow accounts with these characteristics, up to the limits provided for in part 745 of NCUA's regulations. However, NCUA encourages commenters to identify and discuss other kinds of escrow accounts, in addition to realtor and prepaid funeral accounts, which also have characteristics similar enough to IOLTAs to warrant pass-through insurance coverage. Accordingly, NCUA requests comment on the following: (1) What [[Page 27112]] kinds of escrow accounts should qualify for pass-through share insurance coverage and why; (2) what specific attributes these escrow accounts need to possess to obtain coverage; (3) how NCUA can define these accounts to capture their essence and minimize the need for case- by-case analyses of their characteristics; and (4) any other aspect of this topic. In addition, NCUA specifically invites comment on whether it is appropriate to limit the pool of other similar escrow accounts to those where a recognizable fiduciary duty is owed by the escrow agent to the principal. Prepaid Cards NCUA welcomes comments on its proposed treatment of prepaid card programs. To put this in context and provide background information about such programs, we include the following excerpt on prepaid cards from the Federal Financial Institutions Examination Council's Web site.\16\ --------------------------------------------------------------------------- \16\ http://ithandbook.ffiec.gov/it-booklets/retail-payment-systems/payment-instruments,-clearing,-and-settlement/card-based-electronic-payments/prepaid-(stored-value)-cards.aspx. The market for prepaid cards, sometimes called stored-value cards, is one of the fastest-growing segments of the retail financial services industry. While the terms prepaid cards and stored-value cards are frequently used interchangeably, differences exist between the two products. Prepaid cards are generally issued to persons who deposit funds into an account of the issuer. During the funds deposit process, most issuers establish an account and obtain identifying data from the purchaser (e.g., name, phone number, etc.). Stored-value cards do not typically involve a deposit of funds as the value is prepaid and stored directly on the cards. Because its business model requires cardholders to pay in advance, it substantially eliminates the nonpayment risk for the issuing financial institution. The functionality of this product is leading to a wide range of card programs that operate in either closed or open-loop systems, and program innovation has resulted in the development of systems that operate in both structures. Closed-loop systems are generally retailer/issuer business models, while general-purpose cards issued by financial institutions tend to operate in open-loop systems. Open-loop system prepaid cards are processed using the same systems as the branded network cards (MasterCard, Visa, American Express, and Discover) and offer the same functionality. In the past, prepaid cards were mostly issued by nonfinancial businesses in limited deployment environments such as mass transit systems and universities. In recent years, prepaid cards have grown significantly as financial institutions and nonbank organizations target under-banked markets and overseas remittances. Technological innovations in the way information is stored (e.g., magnetic strip or computer chip), the physical form of the payment mechanism, and biometric account access and authentication are converging to create efficiencies, reduce transaction times at the point of sale, and lower transaction costs. There are several types of prepaid cards, including gift, payroll, travel, and teen cards. Either the consumer or an issuer funds the account for the card. When a consumer uses the card to make a purchase, the merchant deducts the amount of the purchase from the card. Transaction authorization can take place through an existing network, a chip stored on the card, or information coded on the magnetic strip. Once the stored value in the card is exhausted, customers may either replenish the value or acquire a new card. In addition to cards, stored-value payment devices are emerging in a variety of other physical forms, most notably key fobs. With the recent introduction of contactless payment technologies, use of chips (smart cards), radio frequency identification (RFID), and near-field communication (NFC) payment devices are becoming more innovative. Initiatives are underway to introduce mobile phones with integrated microchips that can initiate a payment when waved over a specially-equipped reader. The integrated chip can store value, authenticate a consumer, or contain consumer preferences and loyalty program information that can be used for marketing purposes. Prepaid cards may be subject to legal and regulatory risks. For example, the Federal Reserve Board's final rule on Regulation E, issued August 30, 2006, extended its applicability to prepaid cards used for consumers' payroll. The Federal Reserve Board noted that it will monitor the development of other card products and may reconsider Regulation E coverage as these products continue to develop. State laws vary widely with regard to fees. Additionally, financial institutions should ensure that prepaid card product programs comply with the Bank Secrecy Act and anti-money laundering guidance. NCUA generally does not believe that prepaid card programs, such as payroll cards, should be considered escrow accounts similar to IOLTAs for share insurance purposes because the characteristics that define an attorney's relationship with, and the fiduciary duties owed to, the attorney's clients are typically not present in the prepaid card scenario. An IOLTA and a prepaid card program serve very different purposes and usually have completely different structures. NCUA does not believe that a prepaid card program is always sufficiently similar to an IOLTA, for purposes of the Insurance Parity Act, to qualify for pass-through share insurance coverage as an escrow account similar to an IOLTA. However, the Board is interested in receiving comments about prepaid card programs that may be sufficiently similar to IOLTAs. Under certain circumstances some prepaid card programs may be entitled to pass-through share insurance coverage under some other aspects of part 745, not related to IOLTAs. For example, if funds in a prepaid card program deposited in a federally insured credit union qualify as a share account that can be traced back to a specific owner in a specific amount and the owner is a member of the credit union where the funds are kept, then those funds would be entitled to share insurance pursuant to the terms and limits of part 745. D. What recordkeeping requirements must be met to receive share insurance on IOLTAs and other similar escrow accounts? FDIC's deposit insurance regulations provide that the FDIC will recognize a claim for insurance coverage based on a fiduciary relationship (such as an IOLTA or escrow account) only if the relationship is expressly disclosed, by way of specific references, in the deposit account records of the insured depository institution.\17\ FDIC's deposit insurance regulations further provide that if the deposit account records of an insured depository institution disclose the existence of a relationship which might provide a basis for additional insurance, then the details of the relationship and the interests of other parties in the account must be ascertainable either from the deposit account records of the insured depository institution or from records maintained, in good faith and in the regular course of business, by the depositor or by some person or entity that has undertaken to maintain such records for the depositor.\18\ --------------------------------------------------------------------------- \17\ 12 CFR 330.5(b)(1). \18\ 12 CFR 330.5(b)(2). --------------------------------------------------------------------------- Similarly, NCUA's current share insurance regulations provide that the account records of an insured credit union shall be conclusive as to the existence of any relationship pursuant to which the funds in the account are deposited and on which a claim for insurance coverage is founded. Examples of such relationships would include trustee, agent, and custodian.\19\ These kinds of accounts also include IOLTA and other escrow accounts similar to IOLTAs. NCUA will not recognize a claim for insurance based on such a relationship in the absence of such disclosure. Further, NCUA's share insurance regulations provide that if the account records of an insured credit union disclose the existence of a relationship which may provide a basis for additional insurance, then the details of the relationship and the [[Page 27113]] interests of other parties in the account must be ascertainable either from the records of the credit union or the records of the member maintained in good faith and in the regular course of business.\20\ --------------------------------------------------------------------------- \19\ 12 CFR 745.2(c)(1). \20\ 12 CFR 745.2(c)(2). --------------------------------------------------------------------------- IOLTAs and other similar escrow accounts exemplify the kinds of accounts in which a relationship exists upon which a claim for insurance coverage could be founded. They are among the kinds of accounts that NCUA's regulations are intended to cover. Accordingly, based on NCUA's current share insurance regulations, for IOLTAs and other similar escrow accounts to receive the share insurance covered to which they are entitled, the recordkeeping provisions of NCUA's share insurance regulations must be satisfied. No additional recordkeeping requirements are imposed by the Insurance Parity Act. Therefore, NCUA is not proposing any regulatory changes or additions in this regard, but nonetheless welcomes comments on this topic. E. Does the enhanced share insurance coverage provided by the Insurance Parity Act affect the BSA requirements for insured credit unions? It is not the purpose of this proposed rule to discuss in detail an insured credit union's BSA requirements. Accordingly, this is just a reminder to insured credit unions that they continue to have BSA responsibilities for IOLTAs and other similar escrow accounts and that they should continue to be vigilant in that regard. This is especially true considering that IOLTAs and other similar escrow accounts will begin to contain funds for nonmembers which are likely not known by the credit unions in which the accounts are kept. NCUA does not propose to make any regulatory changes in this regard, but nonetheless welcomes comments. F. Do nonmember funds kept in the credit union as a result of the enhanced share insurance coverage provided by the Insurance Parity Act count towards a federal credit union's limit on the receipt of payments on shares from nonmembers pursuant to Sec. 701.32 of NCUA's regulations? The Insurance Parity Act provides that IOLTAs and other similar escrow accounts are considered member accounts if the attorney administering the IOLTA or the escrow agent administering the escrow account is a member of the insured credit union in which the funds are held. NCUA believes that if an IOLTA or other similar escrow account satisfies the above requirement and, therefore, is treated by the Insurance Parity Act as a member account, then the IOLTA or other similar escrow account also should be considered a member account for purposes of Sec. 701.32 of NCUA's regulations. Therefore, funds in those member accounts do not count towards a federal credit union's limit on the receipt of payments on shares from nonmembers pursuant to Sec. 701.32 of NCUA's regulations.\21\ Accordingly, NCUA does not propose any regulatory changes in this regard but welcomes comments. --------------------------------------------------------------------------- \21\ 12 CFR 701.32. --------------------------------------------------------------------------- III. Regulatory Procedures Regulatory Flexibility Act The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a regulation may have on a substantial number of small entities.\22\ For purposes of this analysis, NCUA considers small credit unions to be those having under $50 million in assets.\23\ This rulemaking implements the Insurance Parity Act, which enhances share insurance coverage for IOLTAs and other similar escrow accounts. Accordingly, NCUA certifies the rulemaking will not have a significant economic impact on a substantial number of small credit unions. --------------------------------------------------------------------------- \22\ 5 U.S.C. 603(a). \23\ Interpretive Ruling and Policy Statement 03-2, 68 FR 31949 (May 29, 2003), as amended by Interpretative Ruling and Policy Statement 13-1, 78 FR 4032 (Jan. 18, 2013). --------------------------------------------------------------------------- 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.\24\ For purposes of the PRA, a paperwork burden may take the form of either a reporting or a record- keeping requirement, both referred to as information collections. This proposal, which enhances share insurance coverage for IOLTAs and other similar escrow accounts, will not create new paperwork burdens or modify any existing paperwork burdens. --------------------------------------------------------------------------- \24\ 44 U.S.C. 3507(d); 5 CFR part 1320. --------------------------------------------------------------------------- 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 rulemaking will not have a substantial direct effect 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 this rulemaking does not constitute a policy that has federalism implications for purposes of the executive order. Assessment of Federal Regulations and Policies on Families NCUA has determined that this rulemaking will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999.\25\ --------------------------------------------------------------------------- \25\ Public Law 105-277, 112 Stat. 2681 (1998). --------------------------------------------------------------------------- List of Subjects in 12 CFR Part 745 Credit, Credit unions, Share Insurance. By the National Credit Union Administration Board on April 30, 2015. Gerard Poliquin, Secretary of the Board. For the reasons stated above, NCUA proposes to amend 12 CFR part 745 as follows: PART 745--SHARE INSURANCE AND APPENDIX 0 1. The authority for part 745 continues to read as follows: Authority: 12 U.S.C. 1752(5), 1757, 1765, 1766, 1781, 1782, 1787, 1789; title V, Pub. L. 109-351; 120 Stat. 1966. Sec. 745.14 [Removed]. 0 2. Remove Sec. 745.14 from subpart B. 0 3. Add a new Sec. 745.14 to subpart A to read as follows: Sec. 745.14 Interest on lawyers trust accounts and other similar escrow accounts. (a) Pass-through share insurance. (1) The deposits or shares of any interest on lawyers trust account (IOLTA) or other similar escrow account in an insured credit union are insured on a ``pass-through'' basis, in the amount of up to the SMSIA for each client and principal on whose behalf funds are held in such accounts by either the attorney administering the IOLTA or the escrow agent administering a similar escrow account, in accordance with the other share insurance provisions of this part. (2) Pass-through coverage will only be available if the recordkeeping requirements of Sec. 745.2(c)(1) and the relationship disclosure requirements of [[Page 27114]] Sec. 745.2(c)(2) are satisfied. In the event those requirements are satisfied, funds attributable to each client and principal will be insured on a pass-through basis in whatever right and capacity the client or principal owns the funds. For example, an IOLTA or other similar escrow account must be titled as such and the underlying account records of the insured credit union must sufficiently indicate the existence of the relationship on which a claim for insurance is founded. The details of the relationship between the attorney or escrow agent and their clients and principals must be ascertainable from the records of the insured credit union or from records maintained, in good faith and in the regular course of business, by the attorney or the escrow agent administering the account. NCUA will determine, in its sole discretion, the sufficiency of these records for an IOLTA or other similar escrow account. (b) Membership requirements and treatment of IOLTAs. For share insurance purposes, IOLTAs are treated as escrow accounts. IOLTAs and other similar escrow accounts are considered member accounts and eligible for pass-through share insurance if the attorney administering the IOLTA or the escrow agent administering the escrow account is a member of the insured credit union in which the funds are held. In this circumstance, the membership status of the clients or the principals is irrelevant. (c) Definitions. (1) For purposes of this section: Interest on lawyers trust account (IOLTA) means a system in which lawyers place certain client funds in interest-bearing or dividend- bearing accounts, with the interest or dividends then used to fund programs such as legal service organizations who provide services to clients in need. Other similar escrow account means an account where a licensed professional or other individual serving in a fiduciary capacity holds funds for the benefit of a client as part of a transaction or business relationship, such as realtor accounts and prepaid funeral accounts. Pass-through share insurance means, with respect to IOLTAs and other similar escrow accounts, insurance coverage based on the interest of each person on whose behalf funds are held in such accounts by the attorney administering the IOLTA or the escrow agent administering a similar escrow account. (2) The terms ``Interest on lawyers trust account'', ``IOLTA'', and ``Pass-through share insurance'' are given the same meaning in this section as in 12 U.S.C. 1787(k)(5). [FR Doc. 2015-10553 Filed 5-11-15; 8:45 am] BILLING CODE 7535-01-P
![Federal Register / Vol. 80, No. 91 / Tuesday, May 12, 2015 / Proposed Rules 27109
excludes pass-through and guaranteed 4. Assessment of Federal Regulations calculating Tier 1 capital are also
loans from the CLF and the National and Policies on Families. deducted from net assets.
Credit Union Share Insurance Fund. * * * * *
This proposal would include CLF- NCUA has determined that this
Net risk-weighted assets means risk-
related bridge loans, as defined in proposed rule will not affect family
weighted assets less CLF stock
proposed § 704.2, in the list of loans that well-being within the meaning of
subscriptions, CLF-related bridge loans,
may be excluded in calculating the section 654 of the Treasury and General
loans guaranteed by the NCUSIF, and
aggregate amount of unsecured loans a Government Appropriations Act, 1999,
member reverse repurchase
Corporate may make. In addition, for the Public Law 105–277, 112 Stat. 2681
transactions. For its own account, a
same reasons discussed above, this (1998).
corporate credit union’s payables under
proposal would exclude CLF-related List of Subjects in 12 CFR Part 704 reverse repurchase agreements and
bridge loans from the requirements of receivables under repurchase
§ 704.7(d), which addresses loans to Credit unions, Corporate credit agreements may be netted out if the
nonmembers. unions, Reporting and recordkeeping GAAP conditions for offsetting are met.
requirements. Also, any amounts deducted in
III. Regulatory Procedures
By the National Credit Union calculating Tier 1 capital are also
1. Regulatory Flexibility Act. Administration Board on April 30, 2015. deducted from net risk-weighted assets.
The Regulatory Flexibility Act Gerard Poliquin, * * * * *
requires NCUA to prepare an analysis of Secretary of the Board. ■ 6. Amend § 704.7 by revising
any significant economic impact a paragraph (c)(1)(i), as revised on May 6,
regulation may have on a substantial For the reasons discussed above, the 2015 (80 FR 25932), effective June 5,
number of small entities (primarily National Credit Union Administration 2015, and revising paragraph (d)(1) to
those under $50 million in assets).1 This proposes to amend 12 CFR part 704 as read as follows:
proposed rule only affects Corporates, follows:
all of which have more than $50 million § 704.7 Lending.
in assets. Accordingly, NCUA certifies PART 704—CORPORATE CREDIT * * * * *
the rulemaking will not have a UNIONS (c) * * *
significant economic impact on a (1) * * *
substantial number of small credit ■ 1. The authority citation for part 704 (i) The maximum aggregate amount in
unions. continues to read as follows: unsecured loans and lines of credit from
Authority: 12 U.S.C. 1766(a), 1781, and a corporate credit union to any one
2. Paperwork Reduction Act. member credit union, excluding CLF-
1789.
The Paperwork Reduction Act of 1995 related bridge loans and pass-through
(PRA) applies to rulemakings in which ■ 2. Amend § 704.2 by adding a and guaranteed loans from the CLF and
an agency by rule creates a new definition for CLF-related bridge loan in the NCUSIF, must not exceed 50 percent
paperwork burden or increases an alphabetical order and revising the of the corporate credit union’s total
existing burden.2 For purposes of the definitions of Net assets and Net risk- capital.
PRA, a paperwork burden may take the weighted assets to read as follows: * * * * *
form of a reporting or recordkeeping (d) * * *
§ 704.2 Definitions.
requirement, both referred to as (1) Credit unions. A loan to a
information collections. This proposed * * * * * nonmember credit union, other than
rule would not create any new burdens CLF-related bridge loan means through a loan participation with
or increase any existing burdens. interim financing, extending up to ten another corporate credit union or a CLF-
Therefore, a PRA analysis is not business days, that a corporate credit related bridge loan, is only permissible
required. union provides for a natural person if the loan is for an overdraft related to
3. Executive Order 13132. credit union from the time the CLF the providing of correspondent services
approves a loan to the natural person pursuant to § 704.12. Generally, such a
Executive Order 13132 encourages credit union until the CLF funds the loan will have a maturity of one
independent regulatory agencies to loan. To repay a CLF-related bridge business day.
consider the impact of their actions on loan, the borrowing natural person
state and local interests. NCUA, an * * * * *
credit union assigns the proceeds of the [FR Doc. 2015–10554 Filed 5–11–15; 8:45 am]
independent regulatory agency as CLF advance to the corporate credit BILLING CODE 7535–01–P
defined in 44 U.S.C. 3502(5), voluntarily union making the CLF-related bridge
complies with the executive order to loan for the duration of the bridge loan.
adhere to fundamental federalism NATIONAL CREDIT UNION
* * * * *
principles. The proposed rule does not ADMINISTRATION
have substantial direct effects on the Net assets means total assets less
states, on the relationship between the Central Liquidity Facility (CLF) stock
12 CFR Part 745
national government and the states, or subscriptions, CLF-related bridge loans,
on the distribution of power and loans guaranteed by the National Credit RIN 3133–AE49
Union Share Insurance Fund (NCUSIF),
mstockstill on DSK4VPTVN1PROD with PROPOSALS
responsibilities among the various
and member reverse repurchase Share Insurance and Appendix
levels of government. NCUA has,
therefore, determined that this proposal transactions. For its own account, a AGENCY: National Credit Union
does not constitute a policy that has corporate credit union’s payables under Administration (NCUA).
federalism implications for purposes of reverse repurchase agreements and ACTION: Proposed rule.
the executive order. receivables under repurchase
agreements may be netted out if the SUMMARY: The NCUA Board (Board)
15 U.S.C. 603(a); 12 U.S.C. 1787(c)(1). GAAP conditions for offsetting are met. proposes to amend its share insurance
2 44 U.S.C. 3507(d); 5 CFR part 1320. Also, any amounts deducted in regulations to implement statutory
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![27110 Federal Register / Vol. 80, No. 91 / Tuesday, May 12, 2015 / Proposed Rules
amendments to the Federal Credit I. Background place certain client funds in interest-
Union Act (FCU Act) resulting from the bearing or dividend-bearing accounts,
A. History of IOLTAs
recent enactment of the Credit Union with the interest or dividends then used
Share Insurance Fund Parity Act According to the National Association to fund programs such as legal service
(Insurance Parity Act). The statutory of IOLTA Programs (NAIP),1 IOLTA organizations who provide services to
amendments require NCUA to provide programs began in Australia and Canada clients in need.’’ 8 Pursuant to the
enhanced, pass-through share insurance in the late 1960s to generate funds for Insurance Parity Act, IOLTAs are treated
for interest on lawyers trust accounts legal services to the poor.2 In the United as escrow accounts for share insurance
(IOLTA) and other similar escrow States, Congress passed legislation in purposes. Further, IOLTAs and other
accounts. As its name implies, the the 1980s permitting the establishment similar escrow accounts are considered
Insurance Parity Act ensures that NCUA of certain interest-bearing checking member accounts if the attorney
and the Federal Deposit Insurance accounts,3 which, among many things, administering the IOLTA or the escrow
Corporation (FDIC) insure IOLTAs and helped to enable the creation of IOLTA agent administering the escrow account
other similar escrow accounts in an accounts throughout the United States. is a member of the insured credit union
equivalent manner. The various states operate IOLTA in which the funds are held.9
programs pursuant to their own laws.4
DATES: Comments must be received on Under an IOLTA program, an attorney C. Comparison of FDIC’s and NCUA’s
or before July 13, 2015. or law firm may establish an account at Current Insurance Regulations
ADDRESSES: You may submit comments one or more financial institutions to Regarding IOLTAs
by any of the following methods (Please hold their clients’ funds to pay for legal The FDIC’s deposit insurance
send comments by one method only): services or for other purposes. An regulations 10 do not specifically
• Federal eRulemaking Portal: http:// attorney or a law firm would deposit mention IOLTAs by name. Rather, the
www.regulations.gov. Follow the clients’ funds in one or more IOLTAs FDIC insures an IOLTA as an agent or
instructions for submitting comments. and hold these funds in trust until nominee account. To be insured by the
needed. Typically, the interest or
• NCUA Web site: http://www.ncua. dividends on IOLTAs are donated to
FDIC, an agent or nominee account like
gov/Legal/Regs/Pages/PropRegs.aspx. an IOLTA must expressly disclose, by
charities or other 501(c)(3) tax exempt way of specific reference, the existence
Follow the instructions for submitting organizations pursuant to state law.
comments. of any fiduciary relationship such as an
Generally, the donated funds are used to
• Email: Address to regcomments@ agent or nominee pursuant to which
subsidize legal aid services or for other
ncua.gov. Include ‘‘[Your name] funds are deposited into a bank account
charitable purposes.
Comments on Proposed Rule—Part 745’’ and on which a claim for deposit
in the email subject line. B. The Credit Union Share Insurance insurance coverage is based. The FDIC
Fund Parity Act of 2014 has stated that such an account,
• Fax: (703) 518–6319. Use the
On December 18, 2014, President including an IOLTA, must disclose that
subject line described above for email.
Obama signed into law the Insurance the funds are held by the nominal
• Mail: Address to Gerard Poliquin, account holder on the behalf of others.11
Secretary of the Board, National Credit Parity Act.5 The Insurance Parity Act
amended the share insurance provisions To be insurable, the FDIC must be able
Union Administration, 1775 Duke to ascertain the interests of the other
Street, Alexandria, Virginia 22314– of the FCU Act by requiring enhanced,
pass-through share insurance coverage parties in the IOLTA from the records of
3428. the insured depository institution or
for IOLTAs and other similar escrow
• Hand Delivery/Courier: Same as accounts.6 The Insurance Parity Act from the records of the lawyer.12 Funds
mail address. specifically defines ‘‘pass-through share attributable to each client will be
Public Inspection: You may view all insurance,’’ with respect to IOLTAs and insured on a pass-through basis if this
public comments on NCUA’s Web site other similar escrow accounts, as recordkeeping requirement is
at http://www.ncua.gov/Legal/Regs/ ‘‘insurance coverage based on the satisfied.13
Pages/PropRegs.aspx as submitted, interest of each person on whose behalf Prior to the enactment of the
except for those we cannot post for funds are held in such accounts by the Insurance Parity Act, NCUA’s position
technical reasons. NCUA will not edit or attorney administering the IOLTA or the with respect to the insurability of
remove any identifying or contact escrow agent administering a similar IOLTAs was very similar to FDIC’s,
information from the public comments escrow account, in accordance with except that NCUA’s coverage was
submitted. You may inspect paper regulations issued by [NCUA].’’ 7 limited only to those clients of the
copies of comments in NCUA’s law The Insurance Parity Act defines an attorney who were also members of the
library at 1775 Duke Street, Alexandria, IOLTA as ‘‘a system in which lawyers insured credit union in which the
Virginia 22314, by appointment IOLTA was kept. This was due to the
weekdays between 9 a.m. and 3 p.m. To 1 The NAIP was established in 1986 to enhance
FCU Act’s general limitation to insure
make an appointment, call (703) 518– legal services for the poor and for the only member accounts, with some
administration of justice through the growth and
6546 or send an email to OGCMail@ development of IOLTA programs. http://www.iolta.
ncua.gov. org/about-naip. 8 Id.
2 http://www.iolta.org/what-is-iolta/iolta-history. 9 The Insurance Parity Act also emphasizes that
FOR FURTHER INFORMATION CONTACT: 3 The Depository Institutions Deregulation and its amendments to the FCU Act do not authorize an
mstockstill on DSK4VPTVN1PROD with PROPOSALS
Frank Kressman, Associate General Monetary Control Act of 1980 (Pub. L. 96–221; 94 insured credit union to accept deposits of an IOLTA
Counsel, Office of General Counsel, at Stat. 132). or similar escrow account in an amount greater than
the above address or telephone (703) 4 http://www.americanbar.org/groups/interest_ such credit union is authorized to accept under any
lawyers_trust_accounts/resources/status_of_iolta_ other provisions of federal or state law.
518–6540. programs.html. As determined by each state, an 10 12 CFR part 330.
SUPPLEMENTARY INFORMATION: IOLTA program may be mandatory, voluntary, or an 11 FDIC Opinion Letter No. 98–2 (June 16, 1998)
attorney may opt out of the program. at https://www.fdic.gov/regulations/laws/rules/
I. Background 5 Public Law 113–252, 128 Stat. 2893 (2014). 4000-9940.html.
II. Summary of the Proposed Rule 6 12 U.S.C. 1787(k). 12 Id.
III. Regulatory Procedures 7 Public Law 113–252, 128 Stat. 2893 (2014). 13 Id.
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![Federal Register / Vol. 80, No. 91 / Tuesday, May 12, 2015 / Proposed Rules 27111
exceptions not relevant to this • Should nonmember funds kept in a interest-bearing or dividend-bearing
discussion. federal credit union as a result of the accounts, with the interest or dividends
Federally insured credit unions enhanced share insurance coverage then used to fund programs such as
believed they were placed at a provided by the Insurance Parity Act legal service organizations who provide
competitive disadvantage because of count towards a federal credit union’s services to clients in need.’’
this treatment. With the enactment of limit on the receipt of payments on NCUA is tasked with defining the
the Insurance Parity Act, however, this shares from nonmembers pursuant to kinds of escrow accounts that are
disadvantage has been removed. § 701.32 of NCUA’s regulations? similar enough to IOLTAs to be eligible
Specifically, provided the lawyer As discussed below in this for pass-through share insurance as
administering the IOLTA or the escrow rulemaking, NCUA analyzes the above discussed above. NCUA acknowledges
agent administering a similar escrow questions and proposes how each the challenge to describe with precision
account is a member of the insured should be addressed. NCUA seeks the circumstances under which such
credit union in which such account is public comment on alternative coverage should be provided. There are
maintained, then the interests of each interpretations of the Insurance Parity many different kinds of escrow accounts
client or principal, regardless of that Act and alternative regulatory in use with varying forms and
person’s membership status, on whose approaches that commenters believe are structures. Also, ‘‘similar’’ is a relative
behalf funds are being held in such appropriate and beneficial. However, term that may necessitate NCUA
accounts by the lawyer or escrow agent, NCUA reiterates that despite the reviewing escrow accounts with varying
will be insured on a pass-through basis proposed nature of this rulemaking, structures on a case-by-case basis to
in accordance with the limits in part IOLTA share insurance coverage is determine which are similar enough to
745 of NCUA’s regulations. In an IOLTA currently in place and will remain in IOLTAs to receive pass-through
and other similar escrow accounts, the place regardless of the direction any insurance coverage.
true owners of the funds are the clients subsequent final rule may take. Despite the amorphous nature of
and principals. The lawyers or law firms escrow accounts, NCUA believes it is
B. Pass-Through Share Insurance for important to provide insured credit
and the escrow agents are only agents IOLTAs and Other Similar Escrow
holding the funds on the clients’ and unions with as much regulatory clarity
Accounts and certainty as possible about which
principal’s behalf.
As noted above, the Insurance Parity escrow accounts are considered similar
II. Summary of the Proposed Rule Act defines ‘‘pass-through share enough to IOLTAs to receive pass-
A. Why is NCUA issuing this rule as a insurance,’’ with respect to IOLTAs and through insurance coverage. NCUA
proposal? other similar escrow accounts, as seeks to avoid, to the greatest extent
‘‘insurance coverage based on the possible, the need to make case-by-case
The language of the Insurance Parity interest of each person on whose behalf analyses of escrow accounts as that
Act clearly states that NCUA shall funds are held in such accounts by the process is labor intensive and
provide pass-through share insurance attorney administering the IOLTA or the inefficient, and it creates uncertainty for
for IOLTAs, and it defines what an escrow agent administering a similar insured credit unions.
IOLTA is. Given this level of clarity, escrow account, in accordance with There are some escrow accounts
NCUA takes the position that share regulations issued by [NCUA].14 NCUA whose nature and structure are
insurance coverage for IOLTAs is believes this definition is clear and immediately recognizable as similar to
currently in place and has been since accurate. Also, it is consistent with how an IOLTA. For example, typical realtor
the enactment of the Insurance Parity NCUA currently defines ‘‘pass-through escrow accounts and prepaid funeral
Act, even without any regulatory action share insurance’’ in its share insurance accounts have attributes that, while not
on NCUA’s part. No implementing regulations relating to coverage of identical to IOLTAs, are similar to
regulations are required to effect this certain employee benefit plans.15 NCUA IOLTAs and should be entitled to pass-
aspect of the legislation. However, other proposes to adopt this statutory through share insurance coverage. One
aspects of the legislation do require definition of ‘‘pass-through share of the signature characteristics common
NCUA to take regulatory action. insurance’’ as the regulatory definition to typical realtor accounts, prepaid
Additionally, some of the language in of that term in part 745. funeral accounts, and IOLTAs is that
the Insurance Parity Act is ambiguous each of these kinds of account has a
and leaves unanswered certain C. What escrow accounts should be licensed professional or other
questions. For example, these questions included in the category ‘‘other similar individual serving in a fiduciary
include: escrow accounts’’ as that phrase is used capacity and holding funds for the
• What escrow accounts should be in the Insurance Parity Act? benefit of a client as part of some
included in the category ‘‘other similar The Insurance Parity Act provides transaction or business relationship.
escrow accounts’’ as that phrase is used that, for share insurance purposes, Accordingly, at a minimum, NCUA
in the Insurance Parity Act? IOLTAs are treated as escrow accounts. proposes to extend pass-through share
• Should prepaid card programs, It also provides that pass-through insurance coverage to escrow accounts
such as payroll cards, be considered insurance coverage is available for other with these characteristics, up to the
IOLTAs or other similar escrow kinds of escrow accounts that are limits provided for in part 745 of
accounts for share insurance purposes? similar to IOLTAs. However, the NCUA’s regulations. However, NCUA
• What recordkeeping requirements encourages commenters to identify and
mstockstill on DSK4VPTVN1PROD with PROPOSALS
Insurance Parity Act does not define or
must be satisfied to receive share further describe what constitutes an discuss other kinds of escrow accounts,
insurance on IOLTAs and other similar escrow account that is ‘‘similar’’ to an in addition to realtor and prepaid
escrow accounts? IOLTA. The Insurance Parity Act funeral accounts, which also have
• Does the enhanced share insurance defines an IOLTA as ‘‘a system in which characteristics similar enough to
coverage provided by the Insurance lawyers place certain client funds in IOLTAs to warrant pass-through
Parity Act affect the Bank Secrecy Act insurance coverage.
(BSA) requirements for insured credit 14 Public Law 113–252, 128 Stat. 2893 (2014). Accordingly, NCUA requests
unions? 15 12 U.S.C. 1787(k)(4); 12 CFR 745.9–2. comment on the following: (1) What
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![Federal Register / Vol. 80, No. 91 / Tuesday, May 12, 2015 / Proposed Rules 27113
interests of other parties in the account similar escrow account satisfies the agency as defined in 44 U.S.C. 3502(5),
must be ascertainable either from the above requirement and, therefore, is voluntarily complies with the executive
records of the credit union or the treated by the Insurance Parity Act as a order. This rulemaking will not have a
records of the member maintained in member account, then the IOLTA or substantial direct effect on the states, on
good faith and in the regular course of other similar escrow account also the connection between the national
business.20 should be considered a member account government and the states, or on the
IOLTAs and other similar escrow for purposes of § 701.32 of NCUA’s distribution of power and
accounts exemplify the kinds of regulations. Therefore, funds in those responsibilities among the various
accounts in which a relationship exists member accounts do not count towards levels of government. NCUA has
upon which a claim for insurance a federal credit union’s limit on the determined this rulemaking does not
coverage could be founded. They are receipt of payments on shares from constitute a policy that has federalism
among the kinds of accounts that nonmembers pursuant to § 701.32 of implications for purposes of the
NCUA’s regulations are intended to NCUA’s regulations.21 Accordingly, executive order.
cover. Accordingly, based on NCUA’s NCUA does not propose any regulatory
current share insurance regulations, for Assessment of Federal Regulations and
changes in this regard but welcomes
IOLTAs and other similar escrow Policies on Families
comments.
accounts to receive the share insurance NCUA has determined that this
covered to which they are entitled, the III. Regulatory Procedures rulemaking will not affect family well-
recordkeeping provisions of NCUA’s Regulatory Flexibility Act being within the meaning of section 654
share insurance regulations must be of the Treasury and General
satisfied. No additional recordkeeping The Regulatory Flexibility Act Government Appropriations Act,
requirements are imposed by the requires NCUA to prepare an analysis to 1999.25
Insurance Parity Act. Therefore, NCUA describe any significant economic
is not proposing any regulatory changes impact a regulation may have on a List of Subjects in 12 CFR Part 745
or additions in this regard, but substantial number of small entities.22 Credit, Credit unions, Share
nonetheless welcomes comments on For purposes of this analysis, NCUA Insurance.
this topic. considers small credit unions to be
By the National Credit Union
those having under $50 million in
E. Does the enhanced share insurance Administration Board on April 30, 2015.
assets.23 This rulemaking implements
coverage provided by the Insurance Gerard Poliquin,
the Insurance Parity Act, which
Parity Act affect the BSA requirements enhances share insurance coverage for Secretary of the Board.
for insured credit unions? IOLTAs and other similar escrow For the reasons stated above, NCUA
It is not the purpose of this proposed accounts. Accordingly, NCUA certifies proposes to amend 12 CFR part 745 as
rule to discuss in detail an insured the rulemaking will not have a follows:
credit union’s BSA requirements. significant economic impact on a
Accordingly, this is just a reminder to substantial number of small credit PART 745—SHARE INSURANCE AND
insured credit unions that they continue unions. APPENDIX
to have BSA responsibilities for IOLTAs
Paperwork Reduction Act ■ 1. The authority for part 745
and other similar escrow accounts and
The Paperwork Reduction Act of 1995 continues to read as follows:
that they should continue to be vigilant
in that regard. This is especially true (PRA) applies to rulemakings in which Authority: 12 U.S.C. 1752(5), 1757, 1765,
considering that IOLTAs and other an agency by rule creates a new 1766, 1781, 1782, 1787, 1789; title V, Pub. L.
paperwork burden on regulated entities 109–351; 120 Stat. 1966.
similar escrow accounts will begin to
contain funds for nonmembers which or modifies an existing burden.24 For § 745.14 [Removed].
are likely not known by the credit purposes of the PRA, a paperwork
■ 2. Remove § 745.14 from subpart B.
unions in which the accounts are kept. burden may take the form of either a ■ 3. Add a new § 745.14 to subpart A to
NCUA does not propose to make any reporting or a record-keeping read as follows:
regulatory changes in this regard, but requirement, both referred to as
nonetheless welcomes comments. information collections. This proposal, § 745.14 Interest on lawyers trust accounts
which enhances share insurance and other similar escrow accounts.
F. Do nonmember funds kept in the coverage for IOLTAs and other similar (a) Pass-through share insurance. (1)
credit union as a result of the enhanced escrow accounts, will not create new The deposits or shares of any interest on
share insurance coverage provided by paperwork burdens or modify any lawyers trust account (IOLTA) or other
the Insurance Parity Act count towards existing paperwork burdens. similar escrow account in an insured
a federal credit union’s limit on the credit union are insured on a ‘‘pass-
receipt of payments on shares from Executive Order 13132
through’’ basis, in the amount of up to
nonmembers pursuant to § 701.32 of Executive Order 13132 encourages the SMSIA for each client and principal
NCUA’s regulations? independent regulatory agencies to on whose behalf funds are held in such
The Insurance Parity Act provides consider the impact of their actions on accounts by either the attorney
that IOLTAs and other similar escrow state and local interests. In adherence to administering the IOLTA or the escrow
accounts are considered member fundamental federalism principles,
mstockstill on DSK4VPTVN1PROD with PROPOSALS
agent administering a similar escrow
accounts if the attorney administering NCUA, an independent regulatory account, in accordance with the other
the IOLTA or the escrow agent share insurance provisions of this part.
21 12 CFR 701.32.
administering the escrow account is a (2) Pass-through coverage will only be
22 5 U.S.C. 603(a).
member of the insured credit union in available if the recordkeeping
23 Interpretive Ruling and Policy Statement 03–2,
which the funds are held. NCUA 68 FR 31949 (May 29, 2003), as amended by
requirements of § 745.2(c)(1) and the
believes that if an IOLTA or other Interpretative Ruling and Policy Statement 13–1, 78 relationship disclosure requirements of
FR 4032 (Jan. 18, 2013).
20 12 CFR 745.2(c)(2). 24 44 U.S.C. 3507(d); 5 CFR part 1320. 25 Public Law 105–277, 112 Stat. 2681 (1998).
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![27114 Federal Register / Vol. 80, No. 91 / Tuesday, May 12, 2015 / Proposed Rules
§ 745.2(c)(2) are satisfied. In the event same meaning in this section as in 12 fax +33 (0) 5 62 21 67 18; email
those requirements are satisfied, funds U.S.C. 1787(k)(5). continued.airworthiness@atr.fr; Internet
attributable to each client and principal [FR Doc. 2015–10553 Filed 5–11–15; 8:45 am] http://www.aerochain.com. You may
will be insured on a pass-through basis BILLING CODE 7535–01–P
view this referenced service information
in whatever right and capacity the client at the FAA, Transport Airplane
or principal owns the funds. For Directorate, 1601 Lind Avenue SW.,
example, an IOLTA or other similar Renton, WA. For information on the
DEPARTMENT OF TRANSPORTATION
escrow account must be titled as such availability of this material at the FAA,
and the underlying account records of Federal Aviation Administration call 425–227–1221.
the insured credit union must Examining the AD Docket
sufficiently indicate the existence of the 14 CFR Part 39
relationship on which a claim for You may examine the AD docket on
insurance is founded. The details of the [Docket No. FAA–2015–1280; Directorate the Internet at http://
Identifier 2014–NM–064–AD] www.regulations.gov by searching for
relationship between the attorney or
escrow agent and their clients and RIN 2120–AA64 and locating Docket No. FAA–2015–
principals must be ascertainable from 1280; or in person at the Docket
the records of the insured credit union Airworthiness Directives; ATR–GIE Management Facility between 9 a.m.
or from records maintained, in good Avions de Transport Régional and 5 p.m., Monday through Friday,
faith and in the regular course of Airplanes except Federal holidays. The AD docket
business, by the attorney or the escrow contains this proposed AD, the
AGENCY: Federal Aviation regulatory evaluation, any comments
agent administering the account. NCUA Administration (FAA), DOT.
will determine, in its sole discretion, the received, and other information. The
ACTION: Notice of proposed rulemaking street address for the Docket Operations
sufficiency of these records for an
(NPRM). office (telephone 800–647–5527) is in
IOLTA or other similar escrow account.
(b) Membership requirements and the ADDRESSES section. Comments will
SUMMARY: We propose to adopt a new be available in the AD docket shortly
treatment of IOLTAs. For share airworthiness directive (AD) for certain after receipt.
insurance purposes, IOLTAs are treated ATR–GIE Avions de Transport Régional
as escrow accounts. IOLTAs and other FOR FURTHER INFORMATION CONTACT: Tom
Model ATR42–500 airplanes, and Model
similar escrow accounts are considered Rodriguez, Aerospace Engineer,
ATR72–102, –202, –212, and –212A
member accounts and eligible for pass- International Branch, ANM–116,
airplanes. This proposed AD was
through share insurance if the attorney Transport Airplane Directorate, FAA,
prompted by a report of chafed wires
administering the IOLTA or the escrow 1601 Lind Avenue SW., Renton, WA
between electrical harnesses. This
agent administering the escrow account 98057–3356; telephone (425) 227–1137;
proposed AD would require inspections
is a member of the insured credit union fax (425) 227–1149.
for wiring discrepancies, and corrective
in which the funds are held. In this SUPPLEMENTARY INFORMATION:
actions if necessary. We are proposing
circumstance, the membership status of this AD to detect and correct damaged Comments Invited
the clients or the principals is wiring and incorrect installation of the We invite you to send any written
irrelevant. wiring harness and adjacent air ducts, relevant data, views, or arguments about
(c) Definitions. (1) For purposes of which could lead to wire harness this proposed AD. Send your comments
this section: chafing and arcing, possibly resulting in to an address listed under the
Interest on lawyers trust account an on-board fire. ADDRESSES section. Include ‘‘Docket No.
(IOLTA) means a system in which DATES: We must receive comments on FAA–2015–1280; Directorate Identifier
lawyers place certain client funds in this proposed AD by June 26, 2015. 2014–NM–064–AD’’ at the beginning of
interest-bearing or dividend-bearing ADDRESSES: You may send comments, your comments. We specifically invite
accounts, with the interest or dividends using the procedures found in 14 CFR comments on the overall regulatory,
then used to fund programs such as 11.43 and 11.45, by any of the following economic, environmental, and energy
legal service organizations who provide methods: aspects of this proposed AD. We will
services to clients in need. • Federal eRulemaking Portal: Go to consider all comments received by the
Other similar escrow account means http://www.regulations.gov. Follow the closing date and may amend this
an account where a licensed instructions for submitting comments. proposed AD based on those comments.
professional or other individual serving • Fax: 202–493–2251. We will post all comments we
in a fiduciary capacity holds funds for • Mail: U.S. Department of receive, without change, to http://
the benefit of a client as part of a Transportation, Docket Operations, www.regulations.gov, including any
transaction or business relationship, M–30, West Building Ground Floor, personal information you provide. We
such as realtor accounts and prepaid Room W12–140, 1200 New Jersey will also post a report summarizing each
funeral accounts. Avenue SE., Washington, DC 20590. substantive verbal contact we receive
Pass-through share insurance means, • Hand Delivery: U.S. Department of about this proposed AD.
with respect to IOLTAs and other Transportation, Docket Operations,
similar escrow accounts, insurance M–30, West Building Ground Floor, Discussion
coverage based on the interest of each Room W12–140, 1200 New Jersey The European Aviation Safety Agency
mstockstill on DSK4VPTVN1PROD with PROPOSALS
person on whose behalf funds are held Avenue SE., Washington, DC, between 9 (EASA), which is the Technical Agent
in such accounts by the attorney a.m. and 5 p.m., Monday through for the Member States of the European
administering the IOLTA or the escrow Friday, except Federal holidays. Union, has issued EASA Airworthiness
agent administering a similar escrow For service information identified in Directive 2014–0052R1, dated April 7,
account. this proposed AD, contact ATR–GIE 2014 (referred to after this as the
(2) The terms ‘‘Interest on lawyers Avions de Transport Régional, 1, Allée Mandatory Continuing Airworthiness
trust account’’, ‘‘IOLTA’’, and ‘‘Pass- Pierre Nadot, 31712 Blagnac Cedex, Information, or ‘‘the MCAI’’), to correct
through share insurance’’ are given the France; telephone +33 (0) 5 62 21 62 21; an unsafe condition for certain ATR–
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Document Created: 2015-12-16 07:55:04
Document Modified: 2015-12-16 07:55:04
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Proposed rule. | |
| Dates | Comments must be received on or before July 13, 2015. | |
| Contact | Frank Kressman, Associate General | |
| FR Citation | 80 FR 27109 | |
| RIN Number | 3133-AE49 | |
| CFR Associated | Credit; Credit Unions and Share Insurance |
2025 Federal Register | Disclaimer | Privacy Policy
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