Central Liquidity Facility (rule, 85 FR 23731, April 29, 2020)
Summary
Federal Register pages from Wednesday, April 29, 2020 (85 FR 23731) carrying an NCUA Board interim final rule, issued in response to the COVID–19 pandemic, to give credit unions greater access to liquidity through the NCUA's Central Liquidity Facility. It implements CARES Act changes to the Federal Credit Union Act, which the rule describes as making it easier and more attractive for credit unions to join the Facility and allowing corporate credit unions to obtain loans for their own liquidity needs. The CARES Act temporarily raises the Facility's borrowing authority from twelve times to sixteen times its subscribed capital stock and surplus. The changes sunset on December 31, 2020.
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Cite this document
“Central Liquidity Facility (rule, 85 FR 23731, April 29, 2020).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/central-liquidity-facility-rule-85-fr-23731-april-29-2020-54598c90da/
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23731
Rules and Regulations Federal Register
Vol. 85, No. 83
Wednesday, April 29, 2020
This section of the FEDERAL REGISTER www.regulations.gov, as submitted, The Board underscores that growing
contains regulatory documents having general except for those we cannot post for the Facility’s membership in turn
applicability and legal effect, most of which technical reasons. The NCUA will not enhances its ability to borrow
are keyed to and codified in the Code of edit or remove any identifying or increasingly greater amounts of funds to
Federal Regulations, which is published under contact information from the public provide liquidity to the credit union
50 titles pursuant to 44 U.S.C. 1510.
comments submitted. system. By significantly increasing
The Code of Federal Regulations is sold by FOR FURTHER INFORMATION CONTACT: access to external funding, the Facility
the Superintendent of Documents. Owen Cole, Associate Director of the can better fulfill its central purpose to
Office of Examination and Insurance; or improve general financial stability by
Justin M. Anderson, Senior Staff meeting the liquidity needs of credit
NATIONAL CREDIT UNION Attorney, Office of General Counsel, unions. The Facility is able to borrow
ADMINISTRATION 1775 Duke Street, Alexandria, VA from the U.S. Treasury. The Facility’s
22314–3428. Owen Cole can also be ability to borrow from the U.S.
12 CFR Part 725
reached at (703) 518–6621, and Justin Treasury’s Federal Financing Bank was
RIN 3133–AF18 Anderson can be reached at (703) 518– an essential element of the NCUA’s and
6556. the credit union system’s ability to work
Central Liquidity Facility SUPPLEMENTARY INFORMATION: through the last economic crisis.
AGENCY: National Credit Union I. Background The Board notes that several of the
Administration (NCUA). changes in this interim final rule are
The Facility, a mixed-ownership
ACTION: Interim final rule with request conforming changes based on the
government corporation within the
for comments. recently enacted CARES Act, which
NCUA, established in 1979, serves as a
temporarily amends the FCU Act. The
SUMMARY: In response to the COVID–19 liquidity source for its member credit
CARES Act specifically sunsets these
pandemic, the NCUA Board (Board) is unions.1 Its purpose is to improve
changes to the FCU Act. As such, the
issuing this interim final rule to provide general financial stability by meeting
changes in this rule that correspond to
credit unions with greater access to the liquidity needs of credit unions and
the CARES Act will also sunset in
liquidity to help ensure they remain thereby encouraging savings, supporting
accordance with the CARES Act on
operational throughout the crisis. This consumer and mortgage lending, and
December 31, 2020. To provide clarity
rule will make it easier and more providing basic financial resources to all
and transparency, the Board has
attractive for credit unions to join the segments of the economy.
Section 1795f of the Federal Credit included these temporary changes in
NCUA’s Central Liquidity Facility this rule and explains what will occur
(Facility). In addition, this rule makes Union Act (the FCU Act), among other
things, gives the Board the authority to upon the sunset of the aforementioned
several amendments to conform to the amendments.
Coronavirus Aid, Relief, and Economic prescribe the manner in which the
Security Act (CARES Act). general business of the Facility shall be The specific amendments made by
DATES: This rule is effective on April 29, conducted and prescribe rules and this interim final rule are detailed in the
2020, except for the amendment to regulations to carry out the Facility- next section.
§ 725.6 in amendatory instruction 5, related provisions of the FCU Act.2
II. Amendments
which is effective April 29, 2020 until Under this authority, the Board is
January 1, 2022. Comments must be issuing this interim final rule to The following is a section-by-section
received on or before June 29, 2020. enhance liquidity for credit unions analysis of the changes in this interim
ADDRESSES: You may submit written
during the COVID–19 pandemic and to final rule.
comments, identified by RIN 3133– make regulatory changes that cohere to
the CARES Act.3 Part 725
AF15, by any of the following methods
The Board emphasizes that while A. Definitions
(Please send comments by one method
some of the amendments in this rule are
only):
• Federal eRulemaking Portal: http:// temporary, they will afford significant In accordance with the CARES Act,
www.regulations.gov. Follow the liquidity support to the entire credit the Board is amending the definition of
instructions for submitting comments. union system. However, action is ‘‘Liquidity needs’’ to remove the words
• Fax: (703) 518–6319. Include needed on the part of credit unions that ‘‘primarily serving natural persons.’’
‘‘[Your Name]—Comments on Interim are not already members of the Facility This change is intended to mirror the
Final Rule: CLF’’ in the transmittal. in order for this liquidity solution to statutory change in the CARES Act, and
• Mail: Address to Gerard Poliquin, reach its greatest potential. The Board clarifies that liquidity needs are not
Secretary of the Board, National Credit urges all natural person and corporate limited to only natural person credit
Union Administration, 1775 Duke credit unions that do not already belong unions, but may also include those of
Street, Alexandria, Virginia 22314– to the Facility to join. corporate credit unions or a corporate
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3428. credit union group. This will allow
• Hand Delivery/Courier: Same as
1 Public Law 95–630, 92 Stat 3641 (Nov.10, 1978),
corporate credit unions to obtain loans
codified at 12 U.S.C. 1795, et seq.
mail address. 2 12 U.S.C. 1795f.
for their own liquidity needs. The Board
Public inspection: You may view all 3 Coronavirus Aid, Relief, and Economic Security notes that this amendment will sunset
public comments on the Federal Act, Public Law 116–136, 134 Stat 281 (March 27, in accordance with the CARES Act on
eRulemaking Portal at http:// 2020). December 31, 2020.
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23732 Federal Register / Vol. 85, No. 83 / Wednesday, April 29, 2020 / Rules and Regulations
B. Regular Membership Requirements while not causing undue disruption to The Board believes the inclusion of
The Board is eliminating the six- the operations of a corporate credit this provision appropriately accounts
month waiting period on obtaining union or corporate credit union group for the temporary nature of this
Facility advances for a credit union that that joined the Facility under the provision, while assuring agents that
becomes a regular member. Currently CARES Act amendments. The Board, loan agreements made during this
§ 725.3 provides that, with limited however, invites comments on the one- period will not also be subject to a
exception, any credit union that year time frame to complete the sunset provision or be terminated before
becomes a regular member of the aforementioned actions. The Board maturity. The Board believes this strikes
Facility may not receive Facility requests specific comment on the appropriate balance between
advances, without approval of the determining if this timeframe should be Congressional intent and the tenets of
NCUA Board, for a period of six months shorter or longer. contract law.
In addition to the aforementioned
after becoming a member. D. Agent Member Borrowing
The Board believes it is important to changes, the Board is also making
To effectuate the intent of the CARES cohering changes to §§ 725.18(a) and
remove this restriction in light of the
Act in a safe and sound manner, the 725.19(b) to clarify the requirements
overarching need to make such liquidity
Board is including a clarifying applicable to a Facility advance to an
assistance timely. The advantages of
amendment to § 725.4. Such agent for such agent’s own needs. The
accelerating liquidity-need loans to new
amendment clarifies that an agent Board notes that such changes apply to
members outweigh the practical reasons
member may borrow from the Facility these agent loans the same
that having the waiting period affords to
for its own liquidity needs, but, to do so, creditworthiness and collateral
the Facility’s operations.
such agent must first subscribe to the requirements that currently apply to
C. Agent Membership capital stock of the Facility in an Facility advances to regular members.
In accordance with the CARES Act, amount equal to one-half of 1 percent of The Board believes these changes are
the Board is amending the nature of the the Agent’s own paid-in and necessary because a Facility advance to
requirement for a corporate credit union unimpaired capital and surplus.4 The an agent for its own needs will be
or group of corporate credit unions to Board believes this requirement will similar to a facility advance to a regular
subscribe to the capital stock of the ensure that Facility advances for an member, and, therefore, should be
Facility in an amount equal to one-half agent’s own needs are consistent with subject to the same terms and
of 1 percent of the paid-in an the design and intent of how the Facility conditions.
unimpaired capital and surplus of all of grants extensions of credit to its natural
E. Termination of Membership
the corporate credit union’s or corporate person credit union members. The
Board notes that agents have total The Board is amending the waiting
credit union group’s natural person
discretion as to whether to subscribe to periods for a credit union to terminate
credit union members. This change,
the capital stock and borrow for their its membership in the Facility between
which mirrors the statutory change in
own needs. This is a business decision April 29, 2020 and January 1, 2022.
the CARES Act, allows the Board, in its
for an agent to make and not doing so Under the FCU Act and current § 725.6
sole discretion, to determine which
will not affect it’s standing with the of the NCUA’s regulations, a credit
grouping of natural person member
Facility or impact its ordinary duties union member may terminate its
credit unions of the applying corporate
and responsibilities in fulfilling the membership after a specified amount of
credit union or corporate credit union
needs of its agent group. The Board time based on that credit union’s stock
group are considered covered by the
believes expanding the liquidity subscription in the Facility. Currently, a
Agent’s membership in the Facility. In
resources of corporate credit unions, member of the Facility may terminate its
turn, this approved group is the basis for
even for a temporary period, is an added membership:
calculating the amount of Facility 1. Six months after notifying the
capital stock the corporate credit union measure of liquidity strength for the
system as a whole. NCUA Board in writing of its intention
or corporate credit union group is to do so, if the member’s stock
required to purchase. This will provide In addition, the Board is amending
§ 725.17(b)(2) to clarify that an agent subscription constitutes less than 5
a corporate credit union with the percent of total subscribed Facility
flexibility to subscribe to the capital may apply for a Facility advance based
on its own liquidity needs. stock; or
stock of the Facility up to the maximum 2. Twenty-four months after notifying
extent it can afford to do so. Finally, the Board notes that the
foregoing amendments will sunset in the NCUA Board in writing of its
The Board notes that this amendment intention to do so, if the member’s stock
will sunset in accordance with the accordance with requirements of the
CARES Act on December 31, 2020. As subscription constitutes 5 percent or
CARES Act on December 31, 2020. more of total subscribed Facility stock.5
Upon the sunset of this amendment, any such, the Board is including language to
clarify the ramifications of the sunset of The Board is amending this section of
corporate credit union or corporate part 725 to temporarily permit a credit
credit union group that became an agent this provision. Specifically, this interim
final rule provides that upon sunset of union, regardless of its percentage
member under this provision must, amount of stock subscription, to
within one-year from the sunset date, this provision, an agent must:
(1) Not request any additional Facility withdraw from membership in the
either: Facility after notifying the NCUA Board
1. Purchase Facility stock in advances for its own liquidity needs;
and in writing on the sooner of:
accordance with the terms of the (A) Six months from the date of its
regulation as written post sunset of the (2) continue to follow the terms of the
written notice to the NCUA Board; or
Facility advance agreement entered into
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CARES Act amendments; or (B) December 31, 2020.
2. terminate its membership in the between the agent and the Facility. Further, any credit union, that
facility. 4 A credit union is required to pay into the
remains a member after December 31,
The Board believes that these two Facility one-half of the amount required by the 2020, may, under this rule, withdraw
options take into account the temporary regulations and to hold the other one-half in liquid
nature of the CARES Act amendments, assets on its balance sheet. 5 12 CFR 725.6.
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Federal Register / Vol. 85, No. 83 / Wednesday, April 29, 2020 / Rules and Regulations 23733
from membership immediately upon G. CARES Act Changes Not Included in additional flexibility provided by
notifying the Board in writing of its This Interim Final Rule Congress.
intent to do so. The Board notes that The Board notes that the CARES Act III. Regulatory Procedures
such immediate withdrawal period will includes two additional amendments to
expire on December 31, 2021. After the FCU Act that are not reflected in this A. Administrative Procedure Act
December 31, 2021, the termination rule. Specifically, those changes are as The Board is issuing this interim final
requirements of current paragraphs (a) follows. rule without prior notice and the
and (b) of this section shall be reinstated It considerably increases the Facility’s opportunity for public comment and the
and apply to all members. The Board borrowing capacity. The FCU Act delayed effective date ordinarily
believes that this flexibility is necessary normally provides the Facility with the prescribed by the Administrative
to encourage the greatest number of authority to borrow, provided that these Procedure Act (APA). Pursuant to
eligible credit unions to join the obligations do not exceed twelve times section 553(b)(B) of the APA, general
Facility. the subscribed capital stock and surplus notice and the opportunity for public
The Board notes that having waiting of the Facility (that is, the sum of its comment are not required with respect
periods for stock redemptions is a retained earnings and capital stock).6 to a rulemaking when an ‘‘agency for
provision that is designed to prevent The CARES Act temporarily increases good cause finds (and incorporates the
unpredictable disruptions in the balance the multiplier from ‘‘twelve times’’ to finding and a brief statement of reasons
sheet and operations of the Facility. ‘‘sixteen times.’’ This means that for therefor in the rules issued) that notice
Ordinarily, such waiting periods every $1 of capital and surplus, the and public procedure thereon are
provide flexibility to the Facility to Facility may now borrow $16. As credit impracticable, unnecessary, or contrary
manage transitions of membership in a unions that join the Facility only have to the public interest.’’
to pay in one-half of the capital stock The Board believes that the public
way that makes its balance sheet and
subscription amount, this means that for interest is best served by implementing
pro forma financial information more
every new dollar paid in of the capital the interim final rule immediately upon
stable and predictable. These are
stock subscription amount, the Facility publication in the Federal Register. As
important factors for any financial entity
can now borrow $32.7 As there is discussed above, the Board notes that
to have so that it can plan its needs and currently no corresponding provision in
capacity with adequate reliability for its the COVID–19 crisis is unprecedented.
the NCUA’s regulations, the Board is not It is a rapidly changing and difficult to
stakeholders. The Board is providing the including any related regulatory change
above redemption flexibilities only anticipate how the disruptions caused
in this interim final rule. by the crisis will manifest themselves
during the current COVID–19 pandemic. Further, the legislation provides more
Given the anticipated temporary nature within the financial system and how
clarity about the purposes for which the individual credit unions may be
of this pandemic and the need for NCUA Board can approve liquidity-
increased liquidity during this event, impacted. Because of the widespread
need requests by removing the phrase
the Board is comfortable that expediting impact of a pandemic and the speed
‘‘the Board shall not approve an
membership termination is both with which disruptions have
application for credit the intent of
manageable and necessary. transmitted throughout the United
which is to expand credit union
States, the Board believes it is has good
F. Collateral Requirements portfolios.’’ 8 The NCUA Board now has
cause to determine that ordinary notice
more flexibility and discretion to
and public procedure are impracticable
The Board is reducing the amount of approve applications for Facility
and that moving expeditiously in the
collateral required for certain assets members that have made a reasonable
form of an interim final rule is in the
used to secure each Facility advance effort to first utilize primary sources of
best of interests of the public and the
and each agent loan. Currently, this funding. This change increases the
transparency and efficiency of the loan- federally insured credit unions that
section of the NCUA’s regulations serve that public.
requires that each Facility advance and approval process by removing doubt
The Board views this crisis as one
each agent loan be secured by a first about whether a credit union’s portfolio
which has the potential to disrupt
priority security interest in collateral of is allowed to expand if it borrows from
the Facility to meet liquidity needs. The liquidity within the system. Liquidity
the credit union with a net book value needs are of a nature that if not
at least equal to 110% of all amounts Board notes that part 725 does not use
the ‘‘expand credit union portfolios’’ addressed swiftly and decisively, can
due under the applicable Facility translate into rapid financial distress for
advance or agent loan, or by guarantee language. Further, the Board believes
the current construction of part 725 is individual institutions or even the
of the NCUSIF. For the reasons broader system. These actions are
described below, the Board is replacing flexible enough to encompass this
change in the CARES Act without a proactive steps that are designed to
the 110% requirement with a alleviate potential liquidity strains and
corresponding regulatory change.
requirement that a credit union are undertaken with expedience to
However, the Board is including this
collateralize a Facility advance or Agent ensure the maximum intended effects
discussion to alert the public of this
loan in accordance with the Facility are in place at the earliest opportunity.
collateral table posted on the NCUA’s 6 See. 12 U.S.C. 1795f(a)(4)(A). In addition, the Board notes that the
website, www.NCUA.gov. The collateral 7 Credit unions have to subscribe to the Facility provisions in this rule are temporary in
table varies the required collateral capital stock in the amount of one half of one nature, and designed specifically to help
percentages based upon different types percent of the credit union’s six month average of credit unions affected by the COVID–19
paid-in and unimpaired capital and surplus (that is,
of assets, and in some cases requires less the total of shares/deposits and undivided pandemic. For these reasons, the Board
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than 110%. Depending on the types of earnings). Credit unions only have to remit to the finds that there is good cause consistent
assets a member has available to secure Facility one-half of the subscription amount—that with the public interest to issue the rule
an advance request, this may ease the is one-quarter of one-percent of paid-in and without advance notice and comment.
unimpaired capital and surplus. The other half may
collateral requirements somewhat and be held by the credit union on call of the NCUA The APA also requires a 30-day
permit a greater amount of borrowing Board. delayed effective date, except for (1)
overall. 8 See. 12 U.S.C. 1795e(a)(1). substantive rules which grant or
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23734 Federal Register / Vol. 85, No. 83 / Wednesday, April 29, 2020 / Rules and Regulations
recognize an exemption or relieve a C. Paperwork Reduction Act (b) the accuracy of the agency’s estimate
restriction; (2) interpretative rules and The Paperwork Reduction Act of 1995 of the burden of the proposed collection
statements of policy; or (3) as otherwise (PRA) applies to rulemakings in which of information, including the validity of
provided by the agency for good cause. an agency by rule creates a new the methodology and assumptions used;
Because the rules relieve a restriction, paperwork burden on regulated entities (c) ways to enhance the quality, utility
the interim final rule is exempt from the or modifies an existing burden (44 and clarity of the information to be
APA’s delayed effective date U.S.C. 3507(d)). For purposes of the collected; and (d) ways to minimize the
requirement. PRA, a paperwork burden may take the burden of the collection of information
While the Board believes that there is on those who are to respond, including
form of a reporting, recordkeeping, or a
good cause to issue the rule without through the use of appropriate
third-party disclosure requirement,
advance notice and comment and with automated, electronic, mechanical, or
an immediate effective date, the Board referred to as an information collection.
The NCUA is amending part 725 to other technological collection
is interested in the views of the public techniques or other forms of information
and requests comment on all aspects of eliminate the six-month waiting period
on Facility advances for a credit union technology; and (e) estimates of capital
the interim final rule. or start-up costs and cost of operation,
that becomes a new regular member. By
B. Congressional Review Act removing this restriction, the NCUA can maintenance, and purchase of services
provide needed liquidity assistance in to provide information.
For purposes of the Congressional All comments are a matter of public
Review Act, the OMB makes a an expedited manner. The NCUA is also
records. Comments regarding the
determination as to whether a final rule modifying the waiting period for a
information collection requirements of
constitutes a ‘‘major’’ rule. If a rule is credit union to terminate its
this rule should be sent to Dawn
deemed a ‘‘major rule’’ by the Office of membership in the Facility with the
Wolfgang, National Credit Union
Management and Budget (OMB), the intent of providing added flexibility to
Administration, 1775 Duke Street, Suite
Congressional Review Act generally encourage the greatest number of
6018, Alexandria, Virginia 22314; Fax
provides that the rule may not take eligible credit unions to join the Facility
No. 703–519–8579; or Email at
effect until at least 60 days following its immediately to help the Agency and the
PRAComments@NCUA.gov. Given the
publication. system at large leverage these temporary
limited in-house staff because of the
The Congressional Review Act defines measures and secure an adequate
COVID–19 pandemic, email comments
a ‘‘major rule’’ as any rule that the amount of external liquidity resources.
are preferred.
Administrator of the Office of By significantly increasing access to
Information and Regulatory Affairs of external funding, the Facility can better D. Executive Order 13132
the OMB finds has resulted in or is fulfill its central purpose to improve Executive Order 13132 encourages
likely to result in (A) an annual effect general financial stability by meeting independent regulatory agencies to
on the economy of $100,000,000 or the liquidity needs of credit unions. consider the impact of their actions on
more; (B) a major increase in costs or The information collection state and local interests. The NCUA, an
prices for consumers, individual requirements of part 725 are currently independent regulatory agency as
industries, Federal, State, or local covered by OMB control number 3133– defined in 44 U.S.C. 3502(5), voluntarily
government agencies or geographic 0061. These temporary amendments are complies with the executive order to
regions, or (C) significant adverse effects estimated to increase the number of adhere to fundamental federalism
on competition, employment, respondents from its current estimate of principles.
investment, productivity, innovation, or 5 annually to 269 during this period; This interim final rule does not have
on the ability of United States-based with a total information collection substantial direct effects on the states,
enterprises to compete with foreign- burden of 691 hours. on the relationship between the national
based enterprises in domestic and NCUA has obtained emergency government and the states, or on the
export markets. approval from the Office of Management distribution of power and
For the same reasons set forth above, and Budget for a 6-month period. responsibilities among the various
the Board is adopting the interim final During this time the Agency will accept levels of government. The NCUA has
rule without the delayed effective date public comments on the information therefore determined that this rule does
generally prescribed under the collection requirements and take not constitute a policy that has
Congressional Review Act. The delayed appropriate action in the final request federalism implications for purposes of
effective date required by the for PRA approval. the executive order.
Congressional Review Act does not OMB Control Number: 3133–0061.
apply to any rule for which an agency Title of information collection: E. Assessment of Federal Regulations
for good cause finds (and incorporates Central Liquidity Facility, 12 CFR part and Policies on Families
the finding and a brief statement of 725. The NCUA has determined that this
reasons therefor in the rule issued) that Estimated number of respondents: rule will not affect family well-being
notice and public procedure thereon are 269. within the meaning of section 654 of the
impracticable, unnecessary, or contrary Estimated number of responses per Treasury and General Government
to the public interest. In light of current respondent: 4.26. Appropriations Act, 1999, Public Law
market uncertainty, the Board believes Estimated total annual responses: 105–277, 112 Stat. 2681 (1998).
that delaying the effective date of the 1,146.
rule would be contrary to the public Estimated burden per response: 0.60. F. Regulatory Flexibility Act (RFA)
interest for the same reasons discussed Estimated total annual burden: 691. The Regulatory Flexibility Act (RFA)
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above. The NCUA invites comments on: (a) generally requires that when an agency
As required by the Congressional Whether the proposed collection of issues a proposed rule or a final rule
Review Act, the Board will submit the information is necessary for the proper pursuant to section 553(b) of the APA or
final rule and other appropriate reports performance of the functions of the another law, the agency must prepare a
to Congress and the Government agency, including whether the regulatory flexibility analysis that meets
Accountability Office for review. information will have practical utility; the requirements of the RFA and
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Federal Register / Vol. 85, No. 83 / Wednesday, April 29, 2020 / Rules and Regulations 23735
publish such analysis in the Federal ■ 4. In § 725.4, revise paragraph (a)(2) to unimpaired capital and surplus. Upon
Register. 5 U.S.C. 603, 604. Specifically, read as follows: approval of the application, the Agent
the RFA normally requires agencies to shall forward funds equal to one-half of
§ 725.4 Agent membership.
describe the impact of a rulemaking on this stock subscription to the Facility.
small entities by providing a regulatory (a) * * * This amount shall be in addition to the
impact analysis. Such analysis must (2) Subscribing to the capital stock of amounts required by paragraph (a)(2)(i)
address the consideration of regulatory the Facility in an amount equal to: or (ii) of this section, if a corporate
(i) One-half of 1 percent of the paid-
options that would lessen the economic credit union or corporate credit union
in and unimpaired capital and surplus
effect of the rule on small entities. The group joined the facility as an Agent and
(as determined in accordance with
RFA defines a ‘‘small entity’’ as (1) a intends to borrow for its own liquidity
§ 725.5(b) of this part) of all the
proprietary firm meeting the size needs. Any corporate credit union or
corporate credit union’s or corporate
standards of the Small Business corporate credit union group that
credit union group’s member natural
Administration (SBA); (2) a nonprofit received a Facility advance for its own
person credit unions, except those
organization that is not dominant in its liquidity need under the temporary
which are Regular members of the
field; or (3) a small government requirements set forth in this paragraph
Facility or which have access to the
jurisdiction with a population of less must, as of January 1, 2021 and
Facility through, and are included in the
than 50,000. 5 U.S.C. 601(3)–(6). Except thereafter:
stock subscription of, another Agent (a
for such small government jurisdictions, (A) Not request any additional
natural person credit union which is a
neither State nor local governments are Facility advances for its own liquidity
member of more than one Agent
‘‘small entities.’’ Similarly, for purposes needs; and
member of the Facility must designate
of the RFA, individual persons are not (B) Continue to follow the terms of the
through which Agent it will deal with
small entities. Facility advance agreement entered into
the Facility, and the designated Agent
Rules that are exempt from notice and between the Agent and the Facility.
will be responsible for including the
comment are also exempt from the RFA * * * * *
capital and surplus of such credit union
requirements, including conducting a ■ 5. In § 725.6, effective April 29, 2020
in the calculation of its stock
regulatory flexibility analysis, when until January 1, 2022, paragraphs (a) and
subscription). Upon approval of the
among other things the agency for good (b) are stayed and paragraph (e) is
application, the Agent shall forward
cause finds that notice and public added.
funds equal to one-half of this initial
procedure are impracticable, The addition reads as follows:
stock subscription to the Facility;
unnecessary, or contrary to the public (ii) From April 29, 2020 until
interest.9 Accordingly, the NCUA is not December 31, 2020, one-half of 1 § 725.6 Termination of membership.
required to conduct a regulatory percent of the paid-in and unimpaired * * * * *
flexibility analysis for the reasons stated capital and surplus (as determined in (e) The following requirements apply
above relating to the good cause accordance with § 725.5(b) of this part) to a credit union’s termination of
exemption. of such credit union members of the membership in the Facility:
List of Subjects in 12 CFR Part 725 corporate credit union or corporate (1) A member, regardless of its
credit union group as the Board may amount of stock subscription, may
Credit unions, Reporting and withdraw from membership in the
determine in its sole discretion, except
recordkeeping requirements. Facility after notifying the NCUA Board
those which are Regular members of the
By the NCUA Board on April 13, 2020. Facility or which have access to the in writing on the sooner of:
Gerard Poliquin, Facility through, and are included in the (i) Six months from the date of its
Secretary of the Board. stock subscription of, another Agent (a written notice to the NCUA Board; or
natural person credit union which is a (ii) December 31, 2020.
For the reasons discussed above, the
member of more than one Agent (2) Any credit union that does not
NCUA Board is amending 12 CFR part
member of the Facility must designate elect to withdraw from membership in
725 as follows:
through which Agent it will deal with the Facility during the time periods
PART 725—NATIONAL CREDIT UNION the Facility, and the designated Agent prescribed in paragraph (e)(1) of this
ADMINISTRATION CENTRAL will be responsible for including the section, may immediately withdraw
LIQUIDITY FACILITY capital and surplus of such credit union from membership in the Facility after
in the calculation of its stock notifying the NCUA Board in writing of
■ 1. The authority citation for part 725 subscription). Upon approval of the its intention to do so from January 1,
continues to read as follows: application, the Agent shall forward 2021, to January 1, 2022. As of January
Authority: 12 U.S.C. 1795f(a)(2). funds equal to one-half of this initial 1, 2022, the requirements of paragraphs
stock subscription to the Facility. A (a) and (b) of this section, as in effect on
■ 2. In § 725.2, revise paragraph (i) corporate credit union or corporate March 1, 2020, shall apply.
introductory text to read as follows: credit union group that became an (3) The Facility will process requests
§ 725.2 Definitions. Agent member of the Facility under this under this paragraph (e) upon demand
paragraph shall, after December 31, and deliver funds as soon as practicable,
* * * * * allowing for the time necessary for
2020, but before January 1, 2022, either:
(i) Liquidity needs means the needs of settlement and transfer of funds in these
(A) Purchase Facility stock in
credit unions for: transactions.
accordance with the terms of paragraph
* * * * * (a)(2)(i) of this section or ■ 6. In § 725.17, revise paragraph (b)(2)
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§ 725.3 [Amended]
(B) Terminate its membership in the to read as follows:
facility.
■ 3. In § 725.3, remove and reserve (iii) From April 29, 2020 until § 725.17 Applications for extensions of
paragraph (b). December 31, 2020, if borrowing for its credit.
own liquidity needs, one-half of 1 * * * * *
9 5 U.S.C. 553(a). percent of the Agent’s own paid-in and (b) * * *
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23736 Federal Register / Vol. 85, No. 83 / Wednesday, April 29, 2020 / Rules and Regulations
(2) The Agent’s application shall be DEPARTMENT OF THE TREASURY Involving Real Estate in the United
based on the following: States’’ in all correspondence. In
(i) Approved applications to the Office of Investment Security general, the Treasury Department will
Agent by its member natural person post all comments to https://
31 CFR Parts 800 and 802 www.regulations.gov without change,
credit unions for pending loans to meet
liquidity needs; or including any business or personal
RIN 1505–AC65
information provided, such as names,
(ii) Outstanding loans previously addresses, email addresses, or telephone
Filing Fees for Notices of Certain
made by the Agent to meet liquidity numbers. All comments received,
Investments in the United States by
needs of its member natural person including attachments and other
Foreign Persons and Certain
credit unions; or Transactions by Foreign Persons supporting material, will be part of the
(iii) Such other demonstrable Involving Real Estate in the United public record and subject to public
liquidity needs as the NCUA Board may States disclosure. You should only submit
specify; or information that you wish to make
AGENCY: Office of Investment Security, publicly available.
(iv) The applicant Agent’s own Department of the Treasury. FOR FURTHER INFORMATION CONTACT: For
liquidity needs.
ACTION: Interim rule with request for questions about this rule, contact: Laura
■ 7. In § 725.18, revise paragraphs (a) comments. Black, Director of Investment Security
and (d) to read as follows: Policy and International Relations;
SUMMARY: The interim rule establishes a Meena R. Sharma, Deputy Director of
§ 725.18 Creditworthiness. fee for parties filing a formal written Investment Security Policy and
notice of a transaction for review by the International Relations; David Shogren,
(a) Prior to Facility approval of each
Committee on Foreign Investment in the Senior Policy Advisor; or James Harris,
application of a Regular member for a United States (CFIUS). In establishing a
Facility advance or an Agent member Senior Policy Advisor, at U.S.
fee for such notices, this rule Department of the Treasury, 1500
for a Facility advance for such Agent implements section 1723 of the Foreign
member’s own need, the Facility shall Pennsylvania Avenue NW, Washington,
Investment Risk Review Modernization DC 20220; telephone: (202) 622–3425;
consider the creditworthiness of such Act of 2018, which amends section 721
member. email: CFIUS.FIRRMA@treasury.gov.
of the Defense Production Act of 1950
SUPPLEMENTARY INFORMATION:
* * * * * to allow CFIUS to collect fees. This
(d) A credit union (whether a Regular interim rule includes a request for I. Background
member of the Facility, Agent member, additional public comment. On March 9, 2020, the Department of
or a member natural person credit DATES: the Treasury (Treasury Department)
union) which does not meet the Effective date: The interim rule is published a notice of proposed
Facility’s creditworthiness standards effective on May 1, 2020. rulemaking amending 31 CFR part 800
may be limited in or denied the use of Comment date: The Department of the (Part 800) and 31 CFR part 802 (Part
advances for its liquidity needs. Treasury (Treasury Department) is 802) to establish filing fees. 85 FR 13586
seeking written comments from the (March 9, 2020). (The Office of the
■ 8. In § 725.19, revise paragraphs (a) public on the interim rule, which must Federal Register made the proposed rule
and (b) to read as follows: be received by June 1, 2020. available for public inspection on March
§ 725.19 Collateral requirements. ADDRESSES: Written comments on the 4, 2020.) The proposed rule proposed
interim rule may be submitted through establishing a filing fee for ‘‘covered
(a) Each Facility advance and each one of two methods: transactions’’ under Part 800 and
Agent loan shall be secured by a first • Electronic Submission: Comments ‘‘covered real estate transactions’’ under
priority security interest in collateral of may be submitted electronically through Part 802 that are filed with the
the credit union with a net book value the Federal government eRulemaking Committee on Foreign Investment in the
at least equal to an amount as required portal at https://www.regulations.gov. United States (CFIUS or the Committee)
by the Facility’s collateral table, Electronic submission of comments as formal written notices. The proposed
published at www.NCUA.gov, or by allows the commenter maximum time to rule created a new subpart K on filing
guarantee of the National Credit Union prepare and submit a comment, ensures fees in each of Part 800 and Part 802,
Share Insurance Fund. timely receipt, and enables the Treasury and made a limited number of revisions
(b) The Facility may accept as Department to make the comments to other related sections of those
collateral for each Facility advance to a available to the public. regulations. Public comments on the
Regular member or to an Agent member, • Mail: Send to U.S. Department of proposed rule were due by April 3, 2020
the Treasury, Attention: Laura Black, and are discussed below. This interim
for such Agent member’s own needs, a
Director of Investment Security Policy rule establishes the filing fees for Part
security interest in all assets of the
and International Relations, 1500 800 and Part 802—effective May 1,
member; provided however, that the
Pennsylvania Avenue NW, Washington, 2020—and also allows the public an
value of any assets in which any third
DC 20220. additional opportunity to comment on
party has a perfected security interest
We encourage comments to be the rule.
that is superior to the security interest submitted via https:// In establishing a fee for formal written
of the Facility shall be excluded for www.regulations.gov. Please submit notices, this rule implements section
purposes of complying with the
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comments only and include your name 1723 of the Foreign Investment Risk
requirements of paragraph (a) of this and company name (if any), and cite Review Modernization Act of 2018
section. ‘‘Filing Fees for Notices of Certain (FIRRMA), which amends section 721 of
* * * * * Investments in the United States by the Defense Production Act of 1950
[FR Doc. 2020–08101 Filed 4–28–20; 8:45 am] Foreign Persons and Certain (DPA) to allow CFIUS to collect fees.
BILLING CODE 7535–01–P Transactions by Foreign Persons FIRRMA authorizes the collection of
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