Section 1 – Overview of Ncua's Regulations And

SECTION 1 – OVERVIEW OF NCUA’S REGULATIONS AND SUPERVISORY AUTHORITY

Credit unions are subject to many been amended a number of times since federal laws and regulations that are then. The FCU Act is defined in the pre- discussed throughout the RegTraC amble as “An Act to establish a Federal books. This book focuses on the laws, Credit Union System, to establish a fur- regulations, policies, and procedures ther market for securities of the United required by the National Credit Union States and to make more available to Administration (NCUA), although a people of small means credit for provi- few of the regulations are discussed in dent purposes through a national system detail in other books, as appropriate. All of cooperative credit, thereby helping of NCUA’s regulations apply to federal to stabilize the credit structure of the credit unions. Selected regulations apply United States.” In order to change the also to federally insured, state-chartered language of the Act and to become law, credit unions (FISCUs). both the U.S. House of Representatives In order to track down the particular and the U.S. Senate must pass identical provisions of laws, regulations, or agency bills, and the president must then sign policies and understand the compli- the legislation to make it a public law. ance requirements, it is very important To appreciate the importance to have an overall understanding of the Congress and the president have to the different NCUA documents governing operations of credit unions, consider credit union operations. This section some of the significant amendments to provides on overview. the FCU Act in the past 30 years: • March 1970 — Creation of Federal Laws, the “National Credit Union Administration” as an independent Regulations, and Other agency run by an administrator, replac- Documents That Control ing the Bureau of Federal Credit Credit Union Operations Unions, which was under the U.S. Department of Health, Education, and The Federal Credit Union Act Welfare. • October 1970 — Creation of federal The importance of the share insurance. Federal Credit Union Act NCUA’s authority to issue regulations • November 1978 — Creation of the NOTE: is established by the Federal Credit three-member NCUA board to run This section applies to all Union (FCU) Act, the compilation of the agency and establishment of the federally insured credit “National Credit Union Central unions. federal laws that specifically apply to credit unions. The FCU Act was first Liquidity Facility.” passed by Congress in 1934 and has

• March 1980 — Increase of the union movement. What started as a two- (then)12% interest-rate limit that page bill ended up upon passage as a could be charged by FCUs on loans, law dozens of pages in length. Section increase of share insurance from 5 of this book addresses CUMAA and $40,000 to $100,000, and phasing NCUA’s field-of-membership policies in out the cap on dividend rates. depth.

• August 1989 — Increase in NCUA’s The structure of the - enforcement powers and the penal Federal Credit Union Act ties that can be imposed on federally insured credit unions experiencing The FCU Act is part of the massive problems. United States Code of all the federal laws that cover taxation, environmental • August 1998 — Restoration of NCUA’s protection, bankruptcy, consumer dis- authority to allow multiple-group fields closures, criminal laws, and the like. of membership. Title 12 of the U.S. Code covers all the federal banking laws; the FCU Act starts • May 2009 – Creation of a “Temporary at 12 USC 1751 and runs through 12 Corporate Credit Union Stabilization USC 1795. NCUA publishes an 80-page Fund.” (A “corporate credit union” is booklet, “The Federal Credit Union Act,” a credit union that only provides which contains the full FCU Act with an services to other credit unions, not to index. The Act is also found on NCUA’s consumers.) website. See Appendix 1-A of this sec- The August 1998 amendments to the tion for information on finding NCUA FCU Act are known as the “Credit Union Resources. Membership Access Act” (CUMAA). Almost every key provision affecting Credit unions became the most active the operations of credit unions in the they had ever been in the legislative FCU Act is explained and elaborated process in 1997 and 1998 in order to upon by the NCUA board. The FCU Act persuade Congress to pass H.R. 1151 gives the NCUA board authority to issue (the bill number given by the House of regulations, bylaws, and guidelines to Representatives when the credit union implement the provisions of the law. bill was first introduced). The purpose of Therefore, it is not essential that credit H.R. 1151 was to reverse the 1998 U.S. unions become intimately familiar with Supreme Court ruling that stated NCUA the language of the Federal Credit Union lacked the authority under the Federal Act. However, you should have a general Credit Union Act to allow multiple understanding of what is contained in groups to be served by the same federal the federal law in order to understand credit union. where NCUA may, and may not, have Persuading Congress to pass a sim- flexibility to allow a particular service. ple bill is rarely an easy process, and The FCU Act is divided into three CUMAA is an example of Congress trying parts (called “titles”). In addition to the to address competing interests, in this U.S. Code citations described above, the case the banking industry vs. the credit FCU Act is also sequentially numbered.

You will get a feel for the parallel cita- limitations. tions in the numbered references below. • The requirement that every FCU hold a membership meeting at least annually. Title I – General Provisions (Sections 1752-1772 of the U.S. • The requirement that the FCU be man- Code and Sections 101-131 of the aged by a board of directors, a supervi- Federal Credit Union Act) sory committee, and, where the bylaws This part of the FCU Act covers a so provide, a credit committee. wide range of provisions, establishing • The requirement that the board of the duties and powers of the NCUA and, directors select board officers, as in general terms, the powers of federal specified in the FCU’s bylaws, with the - credit unions (FCUs) as well as restric limitation that only one member of the tions on their operations. Title I covers: board of directors can be compensated • The organization and powers of the as an officer of the board. three-member NCUA board. Board members are nominated by the presi- • Powers and duties of the FCU’s board dent, subject to confirmation by the of directors. U.S. Senate. The president designates • Powers and duties of the credit one as chairperson. Each board mem- committee, if provided for in the FCU’s ber serves for a six-year term and can- bylaws. not be reappointed. No more than two members of the board can be from the • Powers and duties of the supervisory same political party. committee.

• The organization of a federal credit • The authority to pay dividends after union as a corporation. providing for required reserves.

• The authority of NCUA to assess each • The expulsion of members. FCU an annual operating fee to cover • Accounts of minors. the costs of running the agency. • The powers of NCUA to: • The authority of NCUA to supervise and examine FCUs. 4 Issue regulations to carry out the law. • The powers of an FCU — a very 4 Issue regulations to govern corpo- important list which is summarized rate credit union operations. in figure 1.1. 4 Handle involuntary and voluntary FCU liquidations. • Limitations on member business 4 Require FCUs to keep books and loans. records as the agency specifies. • The requirement that NCUA issue FCU 4 Require FCUs to carry fidelity bond bylaws. coverage.

• Field-of-membership authority and • The authority of FCUs to hold Treasury Department tax and loan accounts.

• The tax exemption of FCUs. • The conditions that state-chartered credit unions must meet to qualify for • The possible allotment of space in fed- federal share insurance. Share insur- eral buildings for FCUs requiring that ance coverage has been permanently 95% of the members served by the increased to $250,000. FCU office be federal employees, federal retirees, or their families. • The administration by NCUA of the National Credit Union Share Insurance • The procedures to be followed to con- Fund (NCUSIF) including insurance vert from a federal to a state-chartered premium charges. credit union or from a state-chartered to a federal credit union. • The administration of the Temporary Corporate Credit Union Stabilization • The NCUA board’s authority to man- Fund. age the Community Development Revolving Loan Fund for credit unions. • The power of NCUA to examine all federally insured credit unions. • The possible forfeiture of the credit union’s charter for money-laundering • Criminal and civil penalties for viola- offenses. tion of laws concerning the safety and soundness of federally insured credit The most important part of Title I unions. of the Federal Credit Union Act affecting the day-to-day operations of federal • Authority for all federally insured cred- credit unions is the list of specific pow- it unions to offer share draft accounts, ers in Section 1757. These powers are the only membership service that the summarized in figure 1.1 and form the FCU Act specifically authorizes for basis of many of NCUA’s regulations. state-chartered credit unions.

• Authority for NCUA to require the Title II – Share Insurance involuntary merger of an insured credit (Sections 1781-1790 of the U.S. union in danger of insolvency. Code and Sections 201-216 of the Federal Credit Union Act) • A range of enforcement powers that This part of the Federal Credit Union NCUA can use against federally Act covers share insurance and NCUA’s insured credit unions and “institution- enforcement powers. The structure of affiliated parties” including issuance this title is very disorganized because of cease-and-desist orders, removal Congress over the years has added provi- or suspension from office, and civil sions without adding new subtitles. Even money penalties. experienced credit union lawyers find • Requirements for enforcement of the it challenging to locate particular provi- Bank Secrecy Act’s currency transac- sions in Title II. Share insurance require- tions reporting provisions. ments are explained in depth in section 2 of this book. This title includes: • NCUA’s authority to serve as the con- servator or liquidating agent of an

Figure 1.1

Summary of the Powers Assigned a Federal Credit Union by the Federal Credit Union Act

Note: State-chartered credit unions have to look to their state laws and regulations to determine their authorized powers. In most cases, the authorized powers are similar to those enu- merated below. With the exception of share draft authority, the FCU Act does not grant powers to state-chartered credit unions. Federal credit unions are authorized by law to exercise the following powers: • To make contracts, to sue and be sued, and to use a corporate seal.

• To purchase, hold, and dispose of property necessary or incidental to its operations.

• To make loans to its members, subject to extensive limitations on types, maturities, interest, and the like (including the FCU usury ceiling, currently set by the NCUA Board at 18%).

• To receive funds from members, other credit unions, government agencies — or in the case of designated credit unions serving low-income areas — nonmembers; and to hold funds in share accounts, share certificates, or share draft accounts.

• To invest its funds, but only in investments itemized in the Act.

• To make deposits in federally insured banks with certain exceptions for credit unions operating overseas.

• To borrow from any sources, up to 50% of paid-in capital and unimpaired surplus (including the FCU usury ceiling, currently set by the NCUA Board at 18%)

• To levy late charges for late loan payments.

• To impress and enforce a lien against a member’s account to the extent of any loan made, often referred to as the “statutory lien.”

• To sell travelers checks and money orders, and other money transfer instruments, to cash checks and money orders, to provide check-cashing services, and to provide wire tranfer services to members and to other people who are within the field of membership.

• To purchase, sell, or pledge eligible obligations of members and to purchase from liquidating credit unions notes of members, up to an aggregate of 5% of unimpaired capital and surplus.

• To sell credit union assets or purchase another credit union’s assets or liabilities.

• To invest in mortgage-backed securities.

• To provide technical assistance to credit unions in Poland and Hungary.

• To exercise such incidental powers as shall be necessary or requisite to enable it to carry on effectively the business for which it is incorporated, often referred to as the “incidental powers clause.”

Virtually all of these are subject to additional clarification and/or limitations by regulations issued by the NCUA Board.

insured credit union experiencing seri- director, officer, or employee of the ous problems including procedures for credit union.” the payment of insured deposits. • “Prompt corrective action.” • Special assistance from the NCUSIF, often called “208 assistance” in ref- Title III — Central Liquidity Facility erence to the statutory provision that authorizes NCUA to make loans to, (Section 1795 of the U.S. Code and purchase assets from, or establish Sections 301-312 of the Federal Credit accounts in, insured credit unions Union Act) experiencing difficulty. This part of the Federal Credit Union Act created the Central Liquidity Facility • Authority of insured credit unions to (CLF) in 1978, which is administered serve as depositaries of public money by the NCUA board. The CLF was the and fiscal agents of the U.S. govern- “Maytag repairman” of the credit union ment. movement for much of its 30-year exis- tence. It was established to address • Authority of NCUA to disapprove of any the economic conditions of the 1970s directors, committee members, and when credit unions were so loaned-up senior executive officers of newly char- that they were borrowing funds in order tered, federally insured credit unions to address member loan demands. Until and insured credit unions experiencing 2008, the CLF has had relatively few problems, as determined by the most requests for its services since its incep- recent examination. tion, primarily because of the changing • Protection to employees of federally economic environment, but also because insured credit unions from discharge of the development of the corporate or employment discrimination for pro- credit union system. With the economic viding information to NCUA or to the challenge facing all financial institutions U.S. Justice Department “regarding in 2008, the CLF’s access to govern- any possible violation of any law or ment borrowing was greatly expanded regulation by the credit union or any to help provide support to credit unions

and their members. borrowing. All liabilities NCUA incurs on Membership in the CLF is voluntary behalf of the CLF are backed by the full and open to all credit unions. Credit faith and credit of the U.S. Further infor- unions may access the CLF either mation about current CLF activities can through direct membership or through be found on NCUA’s website. an agent member. Agent membership is available only to corporate credit unions. Important provisions in the Federal When a corporate credit union becomes Credit Union Act not addressed an agent member, its member credit elsewhere in this book unions also gain CLF access. The CLF is authorized to lend money Q. Does a state-chartered credit union to natural-person credit unions for the receive any specific authority to following types of liquidity needs: offer membership services from the • Short-term adjustment credit, to assist Federal Credit Union Act even if its in meeting temporary requirements for state law does not authorize the funds. credit union to exercise that power? A. In virtually all cases, the state-chartered • Seasonal credit, to assist in meeting credit union has to look to state law to seasonal needs for funds arising from have the authority to exercise specific expected patterns of movement in powers. The one conspicuous exception deposits and loans. to this general statement is share-draft • Protracted adjustment credit, for authority. In an unusual move (in 1980), unusual or emergency circumstances when Congress authorized share draft of a longer-term nature resulting from accounts, it included the authority in national, regional, or local difficulties. Title II of the FCU Act which applies to all insured credit unions. The CLF may not lend to a credit union for the purpose of expanding the Q. What if the Federal Credit Union Act credit union’s portfolio. The CLF may is silent about whether a federal also lend to the National Credit Union credit union can offer a specific ser- Share Insurance Fund (NCUSIF) or vice? Is the federal credit union free private credit union insurance funds. to do so? Can NCUA authorize the NCUA regulations require that the CLF service? take a first-priority security interest in specific assets of the credit union with a A. As a general rule, an FCU cannot offer a net book value at least equal to 110% of service not specifically authorized the amount owed to the CLF. Some spe- by the law. However, the “incidental cific programs were launched by the CLF powers” clause (the last power listed in at the end of 2008 to provide additional figure 1.1) is an extremely important liquidity assistance and aid to struggling inclusion of authority for the federal homeowners. credit union to provide other products The CLF’s lending activities are and services that might not expressly funded by its capital and, if necessary, be authorized in the law. The “manage- ment” section of this book provides infor-

mation about NCUA’s interpretation of Tangible personal property taxes, per- what constitutes “incidental activities” haps referred to as “ad valorem” taxes beyond other authorized services speci- in some states, are based on the value fied in the Federal Credit Union Act and of property owned by the taxpayer. How NCUA’s regulations. does the federal credit union determine what is “tangible personal property”? Q. From what taxes are credit unions State law defines the property that is exempt by federal law? subject to taxation – it might include A. Here is some guidance on how to deter- vehicles, furniture, fixtures, perhaps mine what federal, state and local taxes leased equipment, etc. (that may or may not actually be called Sales taxes: The U.S. Supreme Court “taxes”) are ones that a federal credit ruled in 1937 that federal instrumen- union has to pay. State chartered credit talities, which include federal credit unions have to look to their own state unions, are not subject to state and local laws to determine their tax liabilities for sales taxes where the “legal incidence” state and local taxes. of owing the tax falls on the purchasing federal instrumentality. (NCUA legal The Federal Credit Union Act contains opinion letter 94-0716, July 19, 1994 a specific provision covering the taxation to the State of Virginia addresses this of federal credit unions (12 USC §1768, issue.) Section 122 of the Federal Credit Union Complications: Things get a little Act). The section states: more complicated in determining taxa- The federal credit unions organized tion after these three rules. A federal hereunder, their property, their fran- credit union may get monthly utility bills chises, capital, reserves, surpluses, and with things called “taxes” and “fees.” other funds, and their income shall be The federal credit union must pay some exempt from all taxation now or here- of these assessments, but is exempt after imposed by the United States or from others. This obviously raises dis- by any State, Territorial, or local taxing putes, and a local attorney should assist authority; except that any real property the federal credit union in analyzing and any tangible personal property of what are and are not exempt tax items. such federal credit unions shall be sub- Often, there are state regulatory rulings ject to Federal, State, Territorial, and or court decisions that help the lawyer local taxation to the same extent as determine how to categorize a “tax.” other similar property is taxed. As a general analysis, a state or local tax that is imposed directly on a consumer Real property taxes: Federal credit or business is a tax the FCU is exempt unions are subject to real estate taxes from—unless, of course, it is a tax on on property that they own to the same real estate or personal property that the extent as other businesses. federal credit union owns. In legalese, Tangible personal property taxes: federal credit unions are exempt from Federal credit unions are subject to taxes where the “legal incidence” for the same taxes as other businesses pay actually paying the tax would fall on the on tangible personal property taxes.

federal credit union itself. For instance, the rule applicable to federal govern- a federal credit union is exempt from ment employees who travel. There are sales tax that is charged to other busi- a few states and cities that have spe- nesses for the purchase of office sup- cifically exempted federal government plies, this is the analysis the Supreme employees from paying taxes, regard- Court used to exclude federal instrumen- less of how billing occurs, which would talities from sales taxes. therefore exempt federal credit union However, a tax (which may be called employees and volunteers as well. a “fee”) which is levied on some other NCUA has on its website a “Tax entity—such as the electric company— Exemption Letter” that federal credit that the entity decides to pass on to unions can use to help explain this issue its users is not a tax the federal credit to hotels, as well as a 1993 legal opin- union is exempt from paying. Because ion letter (No. 93-0708) on this issue. of restrictions that limit utility compa- Nevertheless, this exemption continues nies from simply raising rates, often it to be disputed by some hotels, espe- is easier for the company just to pass- cially due to the fact that if the hotel through the expense on the bill as a line exempts an organization in error, the item, often with the word “tax” included hotel is still liable for paying the taxes so that people will be unhappy with the owed. NCUA has made clear (see, for taxing authority, not the company. This instance, Legal Opinion Letter No. distinction is exactly why a credit union 97-0511) that it typically does not get will need the assistance of counsel in involved in disputes about whether state determining the difference, since regula- and local taxes are payable by a federal tory rulings and court cases in your state credit union. may determine the application of a par- Federal income taxes: Federal credit ticular tax to federal credit unions. unions are exempt from federal income Hotel taxes: One often asked ques- taxes as “federal instrumentalities.” tion is whether federal credit union (See Section 501(c)(1) of the Internal employees and volunteers have to pay Revenue Code for those organizations the various state and local government that include a tax-exemption specifically taxes that hotels are required to charge in their enabling act, which is stated in for overnight stays. The answer is “no,” the Federal Credit Union Act and quoted federal credit unions do not have to pay above). State chartered credit unions are these taxes as long as the hotel receives specifically exempt from federal income direct payment from the federal credit taxes under Section 501(c)(14) of the union (such as by a credit card issued in Code. the federal credit union’s name where UBIT: Unlike federal credit unions, the credit union, not the employee, is state chartered credit unions are sub- billed). The mere fact that the employee ject to the federal “unrelated business or volunteer will be reimbursed by the income tax” (UBIT) provisions in Section federal credit union is not adequate in 511-514 of the Code, because only order to obtain the exemption from state federal instrumentalities are exempt and local hotel taxes. This rule parallels from UBIT. Until recently, the Internal

Revenue Service only audited an occa- cifically states that federal credit unions sional state chartered credit union for are not exempt from the “taxes” or possible UBIT liability. But in 2007 the “fees” imposed under the Airport and IRS began issuing numerous tax adviso- Airway Revenue Act of 1970, on such ries stating that credit unions owe UBIT things as fuel surcharges and airport on income from a number of products fees because they are not considered to and services, particularly involving the be taxes but rather “are generally viewed sales of insurance. Two credit union as user charges properly applicable.” lawsuits challenging the IRS position on a number of products and services Q. Does the United States Government were filed in 2008. In one lawsuit, a stand behind the National Credit Wisconsin jury ruled for the credit union, Union Share Insurance Fund and the IRS did not appeal. The second (NCUSIF)? lawsuit is underway in Colorado. A. Although Congress has said so on a State chartered credit unions are number of occasions over the years, in required to file with the IRS annually the 2006 the law was changed to make it Form 990, an annual information return very clear that the federal government for tax-exempt organizations. Federal stands behind bank deposit insurance credit unions are not required to file and credit union share insurance. The 990 forms. A few state regulators filed official sign required by NCUA explic- “a group 990 form” on behalf of their itly states not only that funds in federally state-chartered credit unions. insured credit unions are insured to at Federal excise taxes: Whether a least $250,000, but also that the funds federal credit union has to pay a federal are backed by the full faith and credit excise tax will depend on the “legal inci- of the U.S. government. (Congress had dence” analysis. There is an old 1973 temporarily raised federal insurance cov- Internal Revenue Ruling, Rev. Rul. erage from $100,000 to $250,000 in 73-431 (one of the few official analy- 2007, and made the increase permanent ses of this issue), that rules that federal in mid-2010.) credit unions are not subject to federal telephone usage excise taxes, where the NCUA Regulations obligation to pay falls on the person or business having the telephone. The rul- While it is generally unnecessary for ing differentiates between the federal credit unions to ponder the statutory excise tax imposed on communications language found in the Federal Credit services under Section 4251 of the Union Act, it is essential that credit Internal Revenue Code—which the IRS unions understand NCUA’s regulations says federal credit unions are exempt in order to understand what they are from paying—and other federal excise authorized—and not authorized—to do. taxes imposed on retailers and manufac- In addition, FCUs need to understand turers which may be passed on to subse- the requirements of several interpretive quent purchasers. rulings (such as the field-of-membership Moreover, that 1973 IRS ruling spe- requirements) and the FCU bylaws.

These regulations, policies, and proce- areas of credit union operations have dures are the focus of this book. such a significant impact on the safety NCUA is an independent agency of and soundness of the credit union that the executive branch of the U.S. gov- the regulation should apply to state- ernment. The Federal Credit Union Act chartered credit unions as a condition of gives the NCUA board broad authority maintaining federal share insurance. to issue regulations and other guidance to direct the operations of federal credit How a regulation is adopted unions and to assure the safe and sound The “Administrative Procedures Act” operations of federally insured credit covers most aspects of the procedures unions. When addressing issues that that the NCUA—and all federal agen- will have a substantial impact on credit cies—must follow to adopt a final regu- union operations, NCUA will issue a reg- lation. Federal agencies are also gov- ulation to govern the particular topic. erned by the Regulatory Flexibility Act, the Paperwork Reduction Act, and the The list of NCUA regulations Government in the Sunshine Act. The Appendix 1-B provides a list of all requirements of all these laws are incor- NCUA regulations. This chart includes porated into procedures found in Section the citations to the specific regulations, 791 of NCUA’s regulations. which are found in NCUA’s manual enti- Generally, the procedures for develop- tled Rules and Regulations. The manual ing a regulation are these: and periodic updates are provided to • The agency staff will develop a pro- all federally insured credit unions. The posal in consultation with individual complete Rules and Regulations manual NCUA Board members. Proposed is also found on NCUA’s website. regulations are most often generated As you can see from Appendix 1-B, because of a change in the law, a safe- all NCUA regulations are numbered in ty and soundness concern, or a need to the “700” series. This is because they clarify an existing agency directive. are found in the massive Code of Federal Regulations (CFR) at 12 CFR §700 • The NCUA Board is required to publish through §795. The rest of Part 12 of an agenda announcing that the board the Code covers all other federal bank- will be considering a proposed regula- ing regulations. Regulation Z (Truth In tion. Lending), for instance, is found at 12 • The board must consider at a public CFR §226, under the Federal Reserve meeting (an “open” meeting) whether Board’s regulations. The “§” symbol it will propose a regulation for public means “section.” comment. If a majority of the NCUA This chart also notes by a check mark Board (that is, two members) agrees to 4 ( ) which regulations apply not only to seek public comments, the proposed federally chartered credit unions, but regulation will be published in the also to state-chartered credit unions that Federal Register, the official govern- are federally insured (FISCUs). NCUA ment publication of all proposed and has broad authority to decide which

final regulations issued by all federal The NCUA Board has authority to agencies. issue regulations immediately without any comment period (called “interim • Proposed regulations are to be issued final regulations”) if it feels the notice for a minimum of 30 days for what is and public procedures are “impracti- generally referred to as the “notice and cable, unnecessary, or contrary to the comment period.” Typically, proposed public interest.” Two examples of when regulations are open for comment NCUA has issued “interim final regula- between 30 days and 120 days. tions” are the member business loan • NCUA staff then reviews the written (MBL) regulations issued in September comments received and usually within 1998 to comply with Congressionally a few months after the end of the mandated changes as a result of the comment period, proposes in another passage of CUMAA the month before, open meeting a final regulation for the and the Truth In Savings amendments NCUA Board to consider. issued in December 1998, which were also changes to conform to statutory • The board can accept, reject, or amendments. amend the staff proposal. In order for These two regulations became final a regulation to be finalized, it must be regulations on the date they were pub- approved by the majority of the NCUA lished in the Federal Register, contrary Board. If it is approved, it will be to normal practice, which means that published as a final regulation in the credit unions had to immediately comply Federal Register. with them. However, as required with “interim final regulations,” NCUA solic- • NCUA is required by law to give an ited public comments after the effective effective date of at least 30 days dates of the two regulations. The agency after publication in the Register, giv- did make some changes in the MBL ing credit unions an opportunity to rules before issuing a final regulation in hear about the change. NCUA can, June 1999 in response to issues raised and often does, give a longer period by credit unions and their trade associa- between when the NCUA Board tions in their written comments, but the approves a new regulation and when agency found no reason to amend the credit unions must comply with it, TISA interim regulation when it became especially if the regulation will require a final regulation in July 1999. changes in procedures, forms, or train- Occasionally, NCUA may issue an ing. A period shorter than 30 days is “advance notice of proposed rulemak- allowed when: (1) the regulation grants ing” (ANPR) to request comment on an an exemption or relieves a restriction; issue prior to writing a proposed regula- (2) the rule is an “Interpretive Ruling tion. This process allows NCUA or any or Policy Statement” (IRPS discussed federal agency to gather the public’s below); or (3) when the NCUA Board thoughts and opinions on how it might finds “good cause” to have an effec- address a complex or major issue. For tive date earlier than thirty days. instance, in early 2009 in response to

the problems of corporate credit unions tation of what the Federal Credit Union (which provide wholesale services to Act means on a particular subject. Not credit unions, not consumers), NCUA all IRPSs are published in the Federal announced it was evaluating and recon- Register for public comment before sidering the role of corporates in the being finalized. Generally, it is within credit union system. NCUA sought com- NCUA’s discretion whether to first ments for 60 days on what services and request comment on an IRPS. However, functions corporates should be permit- a publi