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Federal Register / Vol. 86, No. 205 / Wednesday, October 27, 2021 / Rules and Regulations
approved by the Board when taking into account the need to review and respond to public comments and prepare a final Board action in response. The Board, therefore, finds this suggestion would not implement the proposal as it was intended. Regarding the commenters transparency concern, the Board notes that it would have discretion to take action to add activities in a public forum, such as open Board meetings, or alternatively, undertake notice-andcomment proceedings if it deems them appropriate or desirable under the circumstances of any particular request to approve a new activity.
Accordingly, under the final rule, the list of permissible activities in 712.5
includes a catchall category for other activities as approved in writing by the NCUA and published on the NCUAs website. The final rule also provides that once the NCUA has approved an activity and published that activity on its website, the NCUA would not remove that particular activity from the approved list, or make substantial changes to the content or description of that approved activity, except through formal rulemaking procedures.

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IV. Investment Authority An FCUs authority to lend to and invest in a credit union organization is provided for in two separate provisions of the FCU Act. The NCUA has historically interpreted the lending and investment authority under the FCU Act as referring to the same types of organizations.65 The Board solicited comment about adopting separate definitions for the types of organizations that an FCU may invest in or lend to, which potentially would expand the types of organizations eligible for FCU
investment. Several commenters supported the Boards decision to reconsider its longstanding interpretation of FCU investment and lending authority. Commenters in support of the reinterpretation generally discussed the benefit of broadly permitting FCUs to invest in financial technology companies. Several commenters stated that FCUs can get left out of the development of new financial technology because of the requirement to primarily serve members. Some commenters stated that additional investment authority would ensure the industry has better leverage, control, and influence in the development of new technologies. Three commenters provided sample safety and soundness conditions that could be applied to these lending authorities.
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One commenter recommended that certain de minimis investments be exempt from CUSO requirements. This commenter recommended that the NCUA permit FCUs to make a 25
percent investment in CUSOs of FISCUs without those CUSOs being subject to part 712. Currently, the preapproved activities and most other requirements of part 712 do not apply to CUSOs with only FISCU investment. Accordingly, if the only credit unions that have an ownership in a CUSO are statechartered, then the CUSO may be able to engage in activities beyond those that are preapproved in 712.5. Thus, any investment in, or loan to, a CUSO
which 712.1 generally describes as ownership interests from an FCU
subjects the CUSO to all of part 712s requirements. The commenters suggestion is that some amount of such investment should be allowed without invoking those requirements. The Board appreciates this recommendation and will take it into consideration when evaluating future action on the investment issue. The Board observes, however, that any future expansion of FCU investment authority would need to be in organizations providing services associated with the routine operations of credit unions, which could vary from some types of entities in which statechartered credit unions may invest.
Another commenter recommended that the proposed interpretation be adopted and extended to corporate credit unions.
In contrast, one banking trade organization stated that expanding FCU
investment authority in CUSOs would be outside the routine operations of credit unions, which are statutorily confined to serving their fields of membership. The commenter stated that the NCUAs position would exceed the agencys legal authority under the FCU
Act.
The Board will consider these comments in determining whether to propose any change to its existing interpretation and regulatory definition of a CUSO. The Board notes, however, that it does not find persuasive the contention that the possible reinterpretation is inconsistent with the FCU Act. As set forth in the preamble to the proposed rule, the investment provision of the FCU Act contains distinct wording from the loan provision. The preamble discussion in the proposed rule discussed the statutory wording and possible interpretation in careful detail. The Board, therefore, declines to withdraw this portion of the proposed rule, as recommended by the commenter, and
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will consider this issue for potential future action.
V. Other Comments The Board also received other comments outside the scope of the proposed rule, which are discussed briefly in this section.
One commenter recommended that where a CUSO is making a loan that involves tax credits the CUSO should be permitted to acquire and syndicate the tax credits, whether among taxable non-credit union members of the CUSO and/or third-party investors. The Board will consider this issue for potential future action for CUSO
investment authorities but notes that these authorities have historically been narrow.66 The NCUA has, however, previously found a CUSOs proposed acquisition and sale of tax credits in connection with approved lending activity to be permissible.67
One commenter asked that CUSOs be permitted to engage in both debt and equity aspects of financing saleleaseback transactions for credit unions, whether those credit unions are members of the CUSO or not. The Board will consider this request in connection with future action on CUSO authorities.
One commenter suggested the NCUA
offer periodic dialogue sessions akin to those recently launched by the Federal Deposit Insurance Corporation, and recommended a CUSO compliance guide. The Board will consider these suggestions as part of its ongoing supervisory program.
VI. Regulatory Procedures Regulatory Flexibility Act The Regulatory Flexibility Act RFA
generally requires that, in connection with a final rulemaking, an agency prepare and make available for public comment a final regulatory flexibility analysis that describes the impact of a rule on small entities defined for purposes of the RFA to include credit unions with assets less than $100
million.68 A regulatory flexibility analysis is not required, however, if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities and publishes its certification and a short, explanatory statement in the Federal Register together with the rule.
66 See
12 CFR 712.5r, 712.6.
Op. Ltr. 030647, FCU and CUSO
Participation in New Markets Tax Credit Program July 2003, available at https www.ncua.gov/
regulation-supervision/legal-opinions/2003/federalcredit-union-and-credit-union-service-organizationparticipation-newmarkets-tax-credits.
68 See 80 FR 57512 Sept. 24, 2015.
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