Truth in Savings

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 707

Truth in Savings

AGENCY: National Credit Union Administration (NCUA).

ACTION: Interim final rule with request for comments.

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SUMMARY: NCUA is amending its regulations that implement the Truth in

Savings Act (TISA). This interim rule allows credit unions to deliver

in electronic form periodic statement disclosures required by NCUA's

regulations if the member agrees to this form of delivery.

DATES: This rule is effective November 26, 1999. Comments must be

received on or before January 25, 2000.

ADDRESSES: Comments should be directed to Becky Baker, Secretary of the

Board. Mail or hand-deliver comments to: National Credit Union

Administration, 1775 Duke Street, Alexandria, VA 22314-3428. You may

also fax comments to (703) 518-6319 or e-mail comments to

[email protected]. Please send comments by one method only.

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

Part 707 of NCUA's regulations 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 and TISA require, among other things, disclosure of yields,

fees and other terms concerning share accounts to members at account

opening, upon request, when changes in terms occur and in periodic

statements. Many of these disclosures must be written. Many laws that

require information to be in writing consider information in electronic

form to be written. Information produced, stored, or communicated by

computer is also generally considered to be a writing, where visual

text is involved.

The Board of Governors of the Federal Reserve System (Federal

Reserve) has issued an interim rule that allows depository institutions

to deliver periodic statement disclosures required by its Regulation DD

in electronic form if the consumer agrees to this form of delivery. 64

FR 49846 (September 14, 1999). In doing so, the Federal Reserve has

stated that electronic delivery of these kind of disclosures will

reduce paperwork and costs for institutions and may benefit consumers

by allowing them to receive their periodic account statements,

including required disclosures, more quickly and in a more convenient

form.

The Federal Reserve's interim rule does not permit a depository

institution to deliver periodic statement disclosures electronically

unless the consumer agrees to this method of delivery, but does not

specifically discuss what constitutes a valid agreement between the

consumer and depository institution. The Federal Reserve has stated

that whether the parties have an agreement would be determined by state

law, but does not intend to require a formal contract. It has also

stated that consumers should be clearly informed when they are

consenting to electronic delivery of periodic statements and

disclosures. The Federal Reserve has further stated that the periodic

statement must be provided in a form that can be displayed as visual

text and must be clear and conspicuous and in a form that the consumer

can retain.

The Federal Reserve's interim rule applies only to periodic

statement disclosures. Other disclosures required by TISA and

Regulation DD may not be delivered in electronic form. The Federal

Reserve, however, has issued a proposal addressing electronic delivery

of these other disclosures. 64 FR 49740 (September 14, 1999).

TISA requires NCUA to promulgate regulations substantially similar

to those promulgated by the 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. NCUA's interim rule is substantially similar to that issued

by the Federal Reserve.

Interim Final Rule

The NCUA Board is issuing this rule as an interim final rule

because there is a strong public interest in having in place consumer

oriented rules that are consistent with those promulgated by the

Federal Reserve. Additionally, NCUA is required to issue rules

substantially similar to those issued by the Federal Reserve within

ninety days of the effective dates of the Federal Reserve's rules.

Accordingly, for good cause, the Board finds that, pursuant to 5 U.S.C.

553(b)(3)(B), notice and public procedures are impracticable,

unnecessary, and contrary to the public interest; and, pursuant to 5

U.S.C. 553(d)(3), the rule shall be effective immediately and without

30 days advance notice of publication. Although the rule is being

issued as an interim final rule and is effective immediately, the NCUA

Board encourages interested parties to submit comments.

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 credit unions, meaning those

under $1 million in assets.

The NCUA has determined and certifies that this interim rule will

not have a significant economic impact on a substantial number of small

credit unions. The reason for this determination is that the amendments

to part 707 provide credit unions with an optional and alternative

method of delivering certain required disclosures. Credit unions are

free to choose not to utilize this alternative. Other credit unions,

who choose to use this alternative, will likely realize a reduction in

their costs of delivery as a result. Accordingly, the NCUA has

determined that a Regulatory Flexibility Analysis is not required.

Paperwork Reduction Act

NCUA has determined that the amendments to part 707 do not increase

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paperwork requirements under the Paperwork Reduction Act of 1995 and

regulations of the Office of Management and Budget.

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-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 interim 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 interim

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 is

reviewing this rule. We are awaiting its determination whether this is

a major rule for purposes of the Small Business Regulatory Enforcement

Fairness Act of 1996.

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 November

18, 1999.

Becky Baker,

Secretary of the Board.

For the reasons set forth above, 12 CFR part 707 is amended as

follows:

PART 707--TRUTH IN SAVINGS

1. The authority citation for part 707 continues to read as

follows:

Authority: 12 U.S.C. 4311.

2. Section 707.6 is amended by revising the heading and adding a

new paragraph (c) to read as follows:

Sec. 707.6 Periodic statement disclosures.

* * * * *

(c) Electronic communication. (1) Definition. The term ``electronic

communication'' means a message transmitted electronically between a

member and a credit union in a format that allows visual text to be

displayed on equipment such as a personal computer monitor.

(2) Electronic communication between credit union and member. A

credit union and a member may agree that the credit union will send by

electronic communication periodic statement disclosures required by

Sec. 707.6. Periodic statement disclosures sent by electronic

communication to a member must comply with Sec. 707.3 and any

applicable timing requirements contained in this part.

[FR Doc. 99-30691 Filed 11-24-99; 8:45 am]

BILLING CODE 7535-01-P