80 FR 57283 - Corporate Credit Unions

NATIONAL CREDIT UNION ADMINISTRATION

Federal Register Volume 80, Issue 184 (September 23, 2015)

The NCUA Board (Board) is issuing this final rule to exclude Central Liquidity Facility-related bridge loans (CLF-related bridge loans) from the aggregate unsecured lending cap to one borrower applicable to corporate credit unions (Corporates). Specifically, a CLF-related bridge loan that is exempt from that cap is a bridge loan made by a Corporate to a natural person credit union where the natural person credit union has been approved for a loan by the CLF and is awaiting funding from the CLF. Additionally, this rule excludes CLF- related bridge loans from the calculation of ``net assets'' and ``net risk weighted assets'' for determining minimum capital requirements.

[Federal Register Volume 80, Number 184 (Wednesday, September 23, 2015)]
[Rules and Regulations]
[Pages 57283-57284]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-24160]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 704

RIN 3133-AE52


Corporate Credit Unions

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: The NCUA Board (Board) is issuing this final rule to exclude 
Central Liquidity Facility-related bridge loans (CLF-related bridge 
loans) from the aggregate unsecured lending cap to one borrower 
applicable to corporate credit unions (Corporates). Specifically, a 
CLF-related bridge loan that is exempt from that cap is a bridge loan 
made by a Corporate to a natural person credit union where the natural 
person credit union has been approved for a loan by the CLF and is 
awaiting funding from the CLF. Additionally, this rule excludes CLF-
related bridge loans from the calculation of ``net assets'' and ``net 
risk weighted assets'' for determining minimum capital requirements.

DATES: This rule is effective October 23, 2015.

FOR FURTHER INFORMATION CONTACT: J. Owen Cole, President, Central 
Liquidity Facility, at 1775 Duke Street, Alexandria, VA 22314 or 
telephone (703) 518-6360; David Shetler, Deputy Director, Office of 
National Examinations and Supervision, at the above address or 
telephone (703) 518-6640; 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. Comment Summary and Final Amendments
III. Regulatory Procedures

I. Background

    At its April 2015 meeting,\1\ the Board issued a proposed rule to 
exclude CFL-related bridge loans from the aggregate unsecured lending 
cap to one borrower applicable to Corporates. The Board issued this 
proposed rule to provide flexibility to Corporates to enhance their 
ability to serve natural person credit unions. That proposal was 
largely in response to comments received on a November 2014 proposed 
rule that made several technical amendments to NCUA's corporate 
regulation.\2\
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    \1\ 80 FR 27108 (May 12, 2015).
    \2\ 79 FR 65353 (Nov. 4, 2014).
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II. Comment Summary and Final Amendments

    In response to the April 2015 proposal, the Board received seven 
comment letters. The commenters were comprised of Corporates and credit 
union trade associations. All of the commenters supported the proposed 
changes and did not recommend any amendments. Accordingly, for the 
reasons set forth in the preamble to the April 2015 proposal, the Board 
is finalizing that proposed rule as published.

III. 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 $50 million 
in assets).\3\ This rule only affects Corporates, all of which have 
more than $50 million in assets. Accordingly, NCUA certifies the rule 
will not have a significant economic impact on a substantial number of 
small credit unions.
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    \3\ 5 U.S.C. 603(a); 12 U.S.C. 1787(c)(1).

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[[Page 57284]]

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 rule does not create any 
new burdens or increase any existing burdens. Therefore, a PRA analysis 
is not required.
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    \4\ 44 U.S.C. 3507(d); 5 CFR part 1320.
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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 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 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 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).

5. Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA) provides generally for congressional review of agency rules. A 
reporting requirement is triggered in instances where NCUA issues a 
final rule as defined by Section 551 of the Administrative Procedure 
Act. NCUA does not believe this final rule is a ``major rule'' within 
the meaning of the relevant sections of SBREFA. NCUA has submitted the 
rule to the Office of Management and Budget for its determination in 
that regard.

List of Subjects in 12 CFR Part 704

    Credit unions, Corporate credit unions, Reporting and recordkeeping 
requirements.

Gerard Poliquin,
Secretary of the Board.

    For the reasons discussed above, the National Credit Union 
Administration amends 12 CFR part 704 as follows:

PART 704--CORPORATE CREDIT UNIONS

0
1. The authority citation for part 704 continues to read as follows:

    Authority:  12 U.S.C. 1766(a), 1781, and 1789.


0
2. Amend Sec.  704.2 by adding a definition for CLF-related bridge loan 
in alphabetical order and revising the definitions of Net assets and 
Net risk-weighted assets to read as follows:


Sec.  704.2  Definitions.

* * * * *
    CLF-related bridge loan means interim financing, extending up to 
ten business days, that a corporate credit union provides for a natural 
person credit union from the time the CLF approves a loan to the 
natural person credit union until the CLF funds the loan. To repay a 
CLF-related bridge loan, the borrowing natural person credit union 
assigns the proceeds of the CLF advance to the corporate credit union 
making the CLF-related bridge loan for the duration of the bridge loan.
* * * * *
    Net assets means total assets less Central Liquidity Facility (CLF) 
stock subscriptions, CLF-related bridge loans, loans guaranteed by the 
National Credit Union Share Insurance Fund (NCUSIF), and member reverse 
repurchase transactions. For its own account, a corporate credit 
union's payables under reverse repurchase agreements and receivables 
under repurchase agreements may be netted out if the GAAP conditions 
for offsetting are met. Also, any amounts deducted in calculating Tier 
1 capital are also deducted from net assets.
* * * * *
    Net risk-weighted assets means risk-weighted assets less CLF stock 
subscriptions, CLF-related bridge loans, loans guaranteed by the 
NCUSIF, and member reverse repurchase transactions. For its own 
account, a corporate credit union's payables under reverse repurchase 
agreements and receivables under repurchase agreements may be netted 
out if the GAAP conditions for offsetting are met. Also, any amounts 
deducted in calculating Tier 1 capital are also deducted from net risk-
weighted assets.
* * * * *
0
3. Amend Sec.  704.7 by revising paragraph (c)(1)(i) and revising 
paragraph (d)(1) to read as follows:


Sec.  704.7  Lending.

* * * * *
    (c) * * *
    (1) * * *
    (i) The maximum aggregate amount in unsecured loans and lines of 
credit from a corporate credit union to any one member credit union, 
excluding CLF-related bridge loans and pass-through and guaranteed 
loans from the CLF and the NCUSIF, must not exceed 50 percent of the 
corporate credit union's total capital.
* * * * *
    (d) * * *
    (1) Credit unions. A loan to a nonmember credit union, other than 
through a loan participation with another corporate credit union or a 
CLF-related bridge loan, is only permissible if the loan is for an 
overdraft related to the providing of correspondent services pursuant 
to Sec.  704.12. Generally, such a loan will have a maturity of one 
business day.
* * * * *
[FR Doc. 2015-24160 Filed 9-22-15; 8:45 am]
 BILLING CODE 7535-01-P