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Federal Register / Vol. 86, No. 205 / Wednesday, October 27, 2021 / Rules and Regulations PART 713FIDELITY BOND AND
INSURANCE COVERAGE FOR
FEDERALLY INSURED CREDIT
UNIONS
11. The authority citation for part 713
continues to read as follows:

Authority: 12 U.S.C. 1761a, 1761b, 1766a, 1766h, 1789a11.
713.6

Amended
12. Amend 713.6, wherever it appears in the table in paragraph a1
and paragraph c, by removing the word CAMEL and adding in its place the word CAMELS.

FR Doc. 202123332 Filed 102621; 8:45 am BILLING CODE 753501P

NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Part 712
RIN 3133AE95

Credit Union Service Organizations CUSOs National Credit Union Administration NCUA.
ACTION: Final rule.
AGENCY:

The NCUA Board Board is issuing a final rule that amends the NCUAs credit union service organization CUSO regulation. The final rule accomplishes two objectives:
expanding the list of permissible activities and services for CUSOs to include the origination of any type of loan that a Federal credit union FCU
may originate; and granting the Board additional flexibility to approve permissible activities and services.
DATES: This final rule is effective November 26, 2021.
FOR FURTHER INFORMATION CONTACT:
Frank Kressman, Office of General Counsel, 703 5186540; or by mail at National Credit Union Administration, 1775 Duke Street, Alexandria, VA
22314.
SUMMARY:

regulations governing both FCUs and FICUs. Section 120 of the FCU Act is a general grant of regulatory authority and authorizes the Board to prescribe regulations for the administration of the FCU Act.2 Section 209 of the FCU Act is a plenary grant of regulatory authority to the NCUA to issue regulations necessary or appropriate to carry out its role as share insurer for all FICUs.3
Accordingly, the FCU Act grants the Board broad rulemaking authority to ensure that the credit union industry and the National Credit Union Share Insurance Fund NCUSIF remain safe and sound.
Under the FCU Act, FCUs have the authority to lend up to one percent of their paid-in and unimpaired capital and surplus, and to invest an equivalent amount, in CUSOs.4 The NCUA
regulates FCUs lending to, and investment in, CUSOs in part 712 of its regulations CUSO rule.5 In general, a CUSO is an organization: 1 In which a FICU has an ownership interest or to which a FICU has extended a loan; 2
is engaged primarily in providing products and services to credit unions, their membership, or the membership of credit unions contracting with the CUSO; and 3 whose business relates to the routine daily operations of the credit unions it serves.6 The CUSO rule provides a list of preapproved activities and services related to the routine daily operations of credit unions.7
The list of preapproved activities and services in the CUSO rule has not been substantively revised since 2008.8 The 2008 final rule added two new categories of permissible CUSO
activities: 1 Credit card loan origination and 2 payroll processing services. The 2008 final rule also added new examples of permissible CUSO
activities and clarified that FCUs may invest in, and loan to, CUSOs that buy and sell participations in loans they are authorized to originate. In the 2008 final rule, commenters requested that FCUs be permitted to lend to or invest in CUSOs involved in broader types of
SUPPLEMENTARY INFORMATION:
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I. Introduction Legal Authority and Background The Board is issuing this rule pursuant to its authority under the Federal Credit Union Act FCU Act.1
Under the FCU Act, the NCUA is the chartering and supervisory authority for FCUs and the federal supervisory authority for federally insured credit unions FICUs. The FCU Act grants the NCUA a broad mandate to issue 1 12

U.S.C. 1751 et seq.

VerDate Sep<11>2014

18:39 Oct 26, 2021

U.S.C. 1766a.
U.S.C. 1789.
4 12 U.S.C. 1757.
5 12 CFR part 712. All sections of part 712 apply to FCUs. Sections 712.2d2ii, 712.3d, 712.4, and 712.11b and c apply to federally insured, state-chartered credit unions FISCUs, as provided in 741.222 of the chapter. FISCUs must follow the law in the state in which they are chartered with respect to the sections in part 712 that only apply to FCUs. Corporate credit union CUSOs are subject to part 704. Any amendments to part 704 would occur through a separate rulemaking and are not included in this final rule.
6 See 12 CFR 712.1d, 712.3b, and 712.5.
7 12 CFR 712.5.
8 73 FR 79307 Dec. 29, 2008.
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lending; specifically, car loans, including direct lending and the purchase of retail installment sales contracts from vehicle dealerships, and payday lending. The NCUA, however, declined to provide such authority at that time.9
II. Proposed Rule At its January 14, 2021 meeting, the Board issued the proposed rule to amend the NCUAs CUSO regulation.10
The proposed rule would accomplish two objectives: Expanding the list of permissible activities and services for CUSOs that FCUs may lend to or invest in to include origination of any type of loan that an FCU may originate; and granting the Board additional flexibility to approve permissible activities and services. The NCUA also sought comment on broadening general FCU
investment authority in CUSOs based on the FCU Acts provision that authorizes FCUs to invest in organizations providing services associated with the routine operations of credit unions, which is codified in a separate provision from the authority for FCUs to lend to credit union organizations. The proposed rule provided for a 30-day comment period that closed on March 29, 2021. To allow interested persons more time to consider and submit comments, the Board extended the comment period for an additional 30 days. The extended comment period closed on April 30, 2021.11
The Board received over 1,000
comments on the proposed rule.
Comments were received from credit unions, both state and federal, CUSOs, credit union leagues and trade associations, banking trade organizations, individuals, consumer organizations, and an association of state credit union supervisors. In general, consumer organizations, banking trade organizations, and individuals who participated in a form letter writing campaign were opposed to the proposed rule. Credit unions were not unanimous, with some credit unions supporting the rule and others opposing it. CUSOs, credit union leagues, and trade organizations were generally in favor of the proposed rule.
III. Final Rule The final rule adopts the proposed rule without any substantive change.
Under the final rule, therefore, CUSOs are permitted to originate any type of 9 The NCUAs rationale for not extending CUSO
lending authority more broadly is discussed in detail in Section III, Final Rule.
10 86 FR 11645 Feb. 26, 2001.
11 86 FR 16679 Mar. 31, 2021.

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