Truth in Savings

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 707

Truth in Savings

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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

SUMMARY: The NCUA is adopting as a final rule without change the

interim final amendments to part 707 issued by NCUA on December 29,

1998. Those amendments implemented certain statutory changes to the

Truth in Savings Act (TISA). Specifically, they modified the rules

governing indoor lobby signs, eliminated subsequent disclosure

requirements for automatically renewable term share accounts with terms

of one month or less, repealed TISA's civil liability provisions as of

September 30, 2001, and permitted disclosure of an annual percentage

yield (APY) equal to the contract dividend rate for term share accounts

with maturities greater than one year that do not compound but require

dividend distributions at least annually.

DATES: This rule is effective July 21, 1999.

FOR FURTHER INFORMATION CONTACT: Frank S. Kressman, Staff Attorney,

Division of Operations, Office of General Counsel, at the above address

or telephone: (703) 518-6540.

SUPPLEMENTARY INFORMATION:

Background

On December 29, 1998, the NCUA Board issued an interim final rule

with request for comments amending part 707 of NCUA's regulations

regarding truth in savings. 63 FR 71573 (December 29, 1998). Part 707

implements TISA. 12 CFR part 707. The purpose of part 707 and TISA is

to assist members in making meaningful comparisons among share accounts

offered by credit unions. Part 707 requires disclosure of fees,

dividend rates, APY, and other terms concerning share accounts to

members at account opening or whenever a member requests this

information. Fees and other information also must be provided on any

periodic statement credit unions send to their members.

TISA requires NCUA to promulgate regulations substantially similar

to those promulgated by the Board of Governors of the Federal Reserve

System (Federal Reserve). 12 U.S.C. 4311(b). In doing so, NCUA is to

take into account the unique nature of credit unions and the

limitations under which they may pay dividends on member accounts.

The Federal Reserve issued final rules to implement certain

statutory changes to TISA. One of these rules expanded an exemption

from certain advertising provisions for signs on the interior of

depository institutions, eliminated the requirement that depository

institutions provide disclosures in advance of maturity for

automatically renewable (rollover) accounts with a term of one month or

less, and repealed TISA's civil liability provisions, effective

September 30, 2001. 63 FR 52105 (September 29, 1998). The Federal

Reserve also promulgated a final rule to permit depository institutions

to disclose an APY equal to the contract interest rate for time

accounts with maturities greater than one year that do not compound but

require interest distributions at least annually. 63 FR 40635 (July 30,

1998). The interim final rule issued by NCUA on December 29, 1998 is

substantially similar to the above rules issued by the Federal Reserve.

Summary of Comments

The NCUA Board received two comment letters regarding the interim

final rule from credit union trade associations. Both commenters

generally supported the interim final rule as drafted.

Regulatory Procedures

Regulatory Flexibility Act

The Regulatory Flexibility Act requires NCUA to prepare an analysis

to describe any significant economic impact any proposed regulation may

have on a substantial number of small entities (primarily those under

$1 million in assets). The NCUA has determined and certifies that this

final rule will not have a significant economic impact on a substantial

number of small credit unions. Accordingly, the NCUA has determined

that a Regulatory Flexibility Analysis is not required.

Paperwork Reduction Act

This final rule has no net effect on the reporting requirements in

part 707.

Executive Order 12612

Executive Order 12612 requires NCUA to consider the effect of its

actions on state interests. It states that: ``Federal action limiting

the policy-

[[Page 33010]]

making discretion of the states should be taken only where

constitutional authority for the action is clear and certain, and the

national activity is necessitated by the presence of a problem of

national scope.'' This final rule will not have a direct effect 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 determined that this final rule

does not constitute a significant regulatory action for purposes of the

executive order.

Small Business Regulatory Enforcement Fairness Act

The Small Business Regulatory Enforcement Fairness Act of 1996

(Pub. L. 104-121) 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

Procedures Act. 5 U.S.C. 551. The Office of Management and Budget has

reviewed this rule and has determined that for purposes of the Small

Business Regulatory Enforcement Fairness Act of 1996 this is not a

major rule.

List of Subjects in 12 CFR Part 707

Advertising, Consumer protection, Credit unions, Reporting and

recordkeeping requirements, Truth in savings.

By the National Credit Union Administration Board on June 14,

1999.

Becky Baker,

Secretary of the Board.

PART 707--TRUTH IN SAVINGS

Accordingly, the interim final rule amending 12 CFR part 707 which

was published at 63 FR 71573 on December 29, 1998, is adopted as a

final rule without change.

[FR Doc. 99-15649 Filed 6-18-99; 8:45 am]

BILLING CODE 7535-01-U