81 FR 17601 - Investment and Deposit Activities-Bank Notes
NATIONAL CREDIT UNION ADMINISTRATION Federal Register Volume 81, Issue 61 (March 30, 2016)
Federal Register Volume 81, Issue 61 (March 30, 2016)
| Page Range | 17601-17602 | |
| FR Document | 2016-07151 |
[Federal Register Volume 81, Number 61 (Wednesday, March 30, 2016)] [Rules and Regulations] [Pages 17601-17602] From the Federal Register Online [www.thefederalregister.org] [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
![17602 Federal Register / Vol. 81, No. 61 / Wednesday, March 30, 2016 / Rules and Regulations
2. Paperwork Reduction Act § 703.14 [Amended] Authority for This Rulemaking
The Paperwork Reduction Act of 1995 ■ 2. Amend § 703.14(f)(5) by removing History
(PRA) applies to rulemakings in which the word ‘‘original’’. The Federal Register published a
an agency by rule creates a new [FR Doc. 2016–07151 Filed 3–29–16; 8:45 am] final rule amending Class E Airspace
paperwork burden or increases an BILLING CODE 7535–01–P Designated as an Extension at Ithaca
existing burden.4 For purposes of the Tompkins Regional Airport, Ithaca, NY,
PRA, a paperwork burden may take the (formerly Tompkins County Airport),
form of a reporting or recordkeeping DEPARTMENT OF TRANSPORTATION and the Kingston VORTAC,
requirement, both referred to as Poughkeepsie, NY (81 FR 5902,
information collections. This final rule Federal Aviation Administration February 4, 2016) Docket No. FAA–
creates new investment options for 2015–4532. Further review revealed the
FCUs but will not create any new 14 CFR Part 71 geographic coordinates for the airport
burdens or increase any existing and navaids needed to be amended in
burdens. Therefore, a PRA analysis is [Docket No. FAA–2015–4532; Airspace
Class D airspace and Class E surface
Docket No. 15–AEA–10]
not required. area airspace. It is also noted that the
Amendment of Class D Airspace and Kingston VORTAC is erroneously listed
3. Executive Order 13132
Class E Airspace for the Following in Class D airspace for Poughkeepsie,
Executive Order 13132 encourages New York Towns; Ithaca, NY; NY, and is removed. Also, Class D
independent regulatory agencies to Poughkeepsie, NY Airspace is added to the title.
consider the impact of their actions on Class D and Class E airspace
state and local interests. NCUA, an AGENCY: Federal Aviation designations are published in
independent regulatory agency as Administration (FAA), DOT. paragraphs 5000, 6002, and 6004,
defined in 44 U.S.C. 3502(5), voluntarily ACTION: Final rule; delay of effective respectively, of FAA Order 7400.9Z
complies with the executive order to date, correction. dated August 6, 2015, and effective
adhere to fundamental federalism September 15, 2015, which is
principles. The final rule does not have SUMMARY: This action changes the incorporated by reference in 14 CFR
substantial direct effects on the states, effective date of a final rule published part 71.1. The Class D and Class E
on the relationship between the national in the Federal Register of February 4, airspace designations listed in this
government and the states, or on the 2016, amending Class E Airspace document will be published
distribution of power and designated as an extension at Ithaca subsequently in the Order. These are
responsibilities among the various Tompkins Regional Airport, Ithaca, NY; administrative corrections and do not
levels of government. NCUA has, and the Kingston VORTAC, affect the controlled airspace boundaries
therefore, determined that this final rule Poughkeepsie, NY. This correction or operating requirements supporting
does not constitute a policy that has updates the geographic coordinates of operations in the Ithaca and
federalism implications for purposes of each navigation aid and Ithaca Poughkeepsie, NY areas.
the executive order. Tompkins Regional Airport (formerly Availability and Summary of
Tompkins County Airport), under Class Documents for Incorporation by
4. Assessment of Federal Regulations D airspace and Class E surface area
and Policies on Families Reference
airspace to coincide with the FAA’s
aeronautical database. Also, Dutchess This document amends FAA Order
NCUA has determined that this final 7400.9Z, Airspace Designations and
rule will not affect family well-being County Airport is added to the Kingston
VORTAC, Poughkeepsie, NY, Reporting Points, dated August 6, 2015,
within the meaning of section 654 of the and effective September 15, 2015. FAA
Treasury and General Government designation in Class E airspace
designated as an extension. The Order 7400.9Z lists Class A, B, C, D, and
Appropriations Act, 1999, Public Law E airspace areas, air traffic service
105–277, 112 Stat. 2681 (1998). Kingston VORTAC reference is removed
from the Class D airspace designation. routes, and reporting points.
List of Subjects This action also adds Class D airspace Correction to Final Rule
12 CFR Part 703 to the title of this rulemaking. Accordingly, pursuant to the
DATES: This correction is effective 0901 authority delegated to me, in the
Credit unions, Investments. UTC, May 26, 2016, and the effective Federal Register of February 4, 2016 (81
By the National Credit Union date of the rule amending 14 CFR part FR 5902) FR Doc. FAA–2016–02040,
Administration Board on March 24, 2016. 71, published on February 4, 2016 (81 Amendment of Class E Airspace for the
Gerard Poliquin, FR 5902), is delayed to 0901 UTC May following NY Towns; Ithaca, NY;
Secretary of the Board. 26, 2016. The Director of the Federal Poughkeepsie, NY, is corrected as
Register approves this incorporation by follows:
For the reasons discussed above, the
reference action under Title 1, Code of On page 5902, column 2, beginning
National Credit Union Administration
Federal Regulations, part 51, subject to on line 6, remove the following text:
amends 12 CFR part 703 as follows:
the annual revision of FAA Order ‘‘Amendment of Class E Airspace for the
PART 703—INVESTMENT AND 7400.9 and publication of conforming following New York Towns; Ithaca, NY;
amendments. Poughkeepsie, NY’’ and add in its place
asabaliauskas on DSK3SPTVN1PROD with RULES
DEPOSIT ACTIVITIES
FOR FURTHER INFORMATION CONTACT: John ‘‘Amendment of Class D and E Airspace
■ 1. The authority citation for part 703 Fornito, Operations Support Group, for the following New York Towns;
continues to read as follows: Eastern Service Center, Federal Aviation Ithaca, NY, Poughkeepsie, NY
Administration, P.O. Box 20636, On page 5903, column 2, after line 23,
Authority: 12 U.S.C. 1757(7), 1757(8), and
Atlanta, Georgia 30320; telephone (404) add the following text:
1757(15).
305–6364. Paragraph 5000 Class D Airspace.
4 44 U.S.C. 3507(d); 5 CFR part 1320. SUPPLEMENTARY INFORMATION: * * * * *
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Document Created: 2016-03-30 09:28:59
Document Modified: 2016-03-30 09:28:59
| 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 | Rules and Regulations | |
| Action | Final rule. | |
| Dates | This rule is effective April 29, 2016. | |
| Contact | John Nilles, Senior Capital Markets | |
| FR Citation | 81 FR 17601 | |
| RIN Number | 3133-AE55 | |
| CFR Associated | Credit Unions and Investments |
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