Part 1.
FINANCE COMMISSION OF TEXAS
Chapter 9.
RULES OF PROCEDURE FOR CONTESTED CASE HEARINGS, APPEALS, AND RULEMAKINGS
Subchapter B. CONTESTED CASE HEARINGS
7 TAC §9.13, §9.21
The Finance Commission of Texas (the commission) proposes
amendments to §9.13 and §9.21, concerning procedure for contested
case hearings.
Chapter 9 contains a body of rules comprising a modernized system of pleading
and practice for administrative proceedings before a finance agency or the
commission. The commission proposes slight modifications to §9.13 and §9.21
to more closely conform the sections to actual practices that have developed
in the hearings process and to more clearly implement the original intent
of the commission in adopting these sections.
Existing §9.13 currently allows officers and directors of closely
held corporations to appear on behalf of the corporation. This practice would
be considered the unauthorized practice of law in the judicial system but
is permissible in administrative hearings. The administrative law judge for
the commission and the finance agencies has as a general matter routinely
allowed a supervisor or manager of a regulated business to appear on behalf
of an employee of the business at hearings in which the employee is a party.
This practice has worked well for several years and has made the proceedings
more manageable. The proposed amendment to §9.13 will expand the language
of the section to more closely conform to this practice.
The proposed amendment to §9.21 revises subsection (c) and adds new
subsection (d). As proposed, §9.21(c) more clearly relates to its original
purpose of eliminating unnecessary paper. Proposed §9.21(d) more clearly
articulates the power of the administrative law judge to exercise control
over the discovery process if a party attempts to abuse the right of discovery.
Discovery undertaken primarily for purposes of intimidation will not be permitted.
Larry Craddock, administrative law judge for the commission and for the
finance agencies, has determined that for the first five-year period the sections
are in effect, there will be no fiscal implication for state or local government
as a result of enforcing or administering the sections.
Mr. Craddock also has determined that, for each year of the first five-year
period the sections as proposed will be in effect, the public benefit anticipated
as a result of the amendments will be to more clearly inform participants
of the reasons the sections were originally adopted and how the sections will
be applied. There will be no effect on small businesses or micro-businesses.
There is no anticipated economic cost to persons who are required to comply
with the sections as proposed.
Comments on the proposal may be submitted in writing to Larry Craddock,
Administrative Law Judge, Finance Commission of Texas, 2601 North Lamar Boulevard,
Austin, Texas 78705-4294, or by e-mail to larry.craddock@banking.state.tx.us.
The amendments are proposed pursuant to Government Code §2001.004,
which requires a state agency to adopt rules of practice stating the nature
and requirements of all available formal and informal procedures. The amendments
are also proposed under specific rulemaking authority contained in the substantive
statutes administered by the finance agencies under the jurisdiction of the
commission, including Finance Code, §§11.301, 11.302, 11.304, 11.306,
14.157, 31.003, 66.002, 96.002, 152.102, 153.002, 154.051, 156.102, 181.003,
201.003, 342.551, 348.513, 371.006, and 396.051, and Health and Safety Code, §711.012(a)
and §712.008.
Government Code, Chapter 2001, is affected by the proposed amendments.
Finance Code, Titles 3-5, and Health and Safety Code, Chapters 711 and 712,
are affected by the proposed amendments to the extent of provisions relating
to a right to hearing before a finance agency or the commission.
§9.13.Appearances and Representation.
(a)
Because
[
(1)
a natural person may appear
"pro se" (without an attorney) in his or her own behalf;
(2)
a company or an employee of
the company may appear through a bona fide officer or employee of the company
even if the representative is not a lawyer; and
(3)
a party may appear through
an out-of-state attorney, qualified law student, or an unlicensed law school
graduate under the same conditions as would govern an appearance by the representative
in state court.
(b)
In making an appearance at an agency hearing,
each party and each representative shall obey the same rules of ethics and
professional conduct that govern a licensed attorney in this state
[
§9.21.Discovery.
(a)-(b)
(No change.)
(c)
Due to space limitations, parties should not file
a discovery document with the administrative law judge unless the document
contains information material to an issue upon which a ruling is requested
or is to be introduced into evidence.
(d)
In the interest of justice and for good
cause shown, the administrative law judge may enter a discovery order superceding
a rule of discovery that might otherwise be applicable
[
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308682
Everette D. Jobe
Certifying Official
Finance Commission of Texas
Proposed date of adoption: February 20, 2004
For further information, please call: (512) 475-1300
Chapter 25.
PREPAID FUNERAL CONTRACTS
Subchapter A. CONTRACT FORMS
7 TAC §25.5
The Finance Commission of Texas (the commission) proposes
an amendment to §25.5, concerning approval of non-model contract forms.
The commission is proposing to amend §25.5 to permit the department to
waive or reduce the filing fee of $250 for review of minor amendments to a
previously approved non-model document.
Stephanie Newberg, Deputy Commissioner, Texas Department of Banking, has
determined that, for the first five-year period the amendment is in effect,
there will be no fiscal implication for state or local government as a result
of enforcing or administering the amended section.
Ms. Newberg also has determined that, for each year of the first five-year
period the amendment as proposed will be in effect, the public benefit anticipated
as a result of the amendment will be reduced costs to industry for required
document approval. There will be no effect on small businesses or micro-businesses.
There is no anticipated economic cost to persons who are required to comply
with the amended section.
Comments regarding the proposed amendment may be submitted to Everette
Jobe, General Counsel, Texas Department of Banking, 2601 North Lamar Boulevard,
Suite 300, Austin, Texas 78705-4294, or by e-mail to ejobe@banking.state.tx.us.
The amendment to §25.5 is proposed under Finance Code, §154.051(b),
which authorizes the commission to adopt reasonable rules regarding enforcement
and administration of Chapter 154.
Finance Code, Chapter 154, is affected by the proposed amendment.
§25.5.How Do I Obtain Approval of a Non-Model Contract or Waiver?
(a)
(No change.)
(b)
Application for approval. Your application for approval
of your proposed non-model document must be in writing and include all additional
information, documents, and fees required by this subsection. You should file
your application as far in advance of the date you intend to use your proposed
document as possible.
(1)
The additional information, documents, and fees that you
must file as part of your application include:
(A) - (E)
(No change.)
(F)
payment of a $250 filing fee
, except that upon request
the department may waive or reduce the fee for review of minor amendments
to a previously approved non-model document that are submitted under subparagraph
(C) of this paragraph
.
(2) - (3)
(No change.)
(c) - (f)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308688
Everette D. Jobe
Certifying Official
Texas Department of Banking
Proposed date of adoption: February 20, 2004
For further information, please call: (512) 475-1300
7 TAC §§26.2, 26.4, 26.11, 26.12
The Finance Commission of Texas (commission) proposes new §26.4,
concerning time periods applicable to ordering and setting burial markers
and monuments in perpetual care cemeteries, and new §26.12, concerning
responding to written consumer complaints. The commission also proposes amendments
to §26.2, concerning records a perpetual care cemetery must maintain,
and §26.11, concerning the method of filing consumer complaints with
the Texas Department of Banking (department).
Health and Safety Code, Chapter 712, governs the regulation of perpetual
care cemeteries in Texas, and §712.008 authorizes the commission to adopt
rules to enforce and administer the chapter. The proposed new §26.4 and §26.12
implement newly enacted Health and Safety Code, §712.008(b), which specifically
directs the commission to adopt rules establishing reasonable standards for
the timely placement of burial markers and monuments in a perpetual care cemetery
and the timely response to consumer complaints about a perpetual care cemetery.
The proposed new sections apply to a cemetery corporation that owns or operates
a perpetual care cemetery governed by Health and Safety Code, Chapter 712
(Cemetery).
The proposed amendments to §26.2 and §26.11 conform the definitions
of "consumer complaint" and "consumer" in those respective sections to the
context in which the terms are used and make their meaning consistent with
proposed new §26.4 and §26.12.
Proposed new §26.4 establishes time periods within which a Cemetery
must order and set burial markers and monuments and related requirements.
Proposed new subsection (a) defines relevant terms. The term "purchaser" is
defined to include the person who signs the purchase contract as well as a
person authorized under the contract to act on his or her behalf. If the person
who signs the contract is deceased and is the person for whom the marker or
monument has been purchased, the definition of "purchaser" also includes any
person listed in Health and Safety Code, §711.002(a), who the Cemetery
determines should be considered a "purchaser" under the circumstances.
Proposed new §26.4(b) - (d) establish the time periods for ordering
and setting burial markers and monuments. Under each subsection, the relevant
time period begins to run after
all
of the
applicable events listed in the subsection have occurred. For example, proposed
new §26.4(b) requires a Cemetery to order a purchaser's marker or monument
on or before the 10th day after the date as of which the purchaser has paid
the amount the Cemetery requires to order the marker or monument
and
the purchaser approves the design and lettering and signs any documentation
necessary for the order to be placed. Proposed new §26.4(c) requires
a Cemetery to set a marker, once it has been delivered to the cemetery location,
on or before the 15th day after the date as of which all of the events specified
in that subsection, as applicable, have occurred. Proposed new §26.4(d)
requires a Cemetery to set a monument, once it has been delivered to the cemetery
location, on or before the 25th day after the date as of which all the applicable
events specified in that subsection have occurred.
Proposed new §26.4(e) requires a Cemetery to notify a purchaser in
writing if a burial marker or monument cannot be set within the time period
required by proposed §26.4(c) and (d) because of inclement weather or
special circumstances, establishes a five day deadline for providing the notice,
and specifies the information that must be included in the notice.
Proposed new §26.4(f) requires a Cemetery to maintain a purchaser's
marker or monument contract file that contains the documentation necessary
to verify and substantiate compliance with proposed new §26.4.
Proposed new §26.4(g) requires a Cemetery to inform a purchaser in
writing of the proposed new section's date requirements and specifies the
documents in which the Cemetery may provide the information.
Proposed new §26.4(h) provides that the requirements related to ordering
a purchaser's marker or monument established in proposed new §26.4(b)
apply only to a marker or monument purchased from the Cemetery or an affiliate
of the Cemetery.
Proposed new §26.4(i) identifies the circumstances in which the setting
requirements established in proposed new §26.4(c) and (d) apply to a
marker or monument purchased from a third-party vendor.
Proposed new §26.12 specifies the actions a Cemetery must take if
it receives a written consumer complaint. Proposed new §26.12(a) defines
terms. The proposed definition of "consumer complaint" includes any written
complaint a Cemetery receives from a consumer regarding the manner in which
the Cemetery operates its perpetual care cemetery, or performs its obligations
under a perpetual care cemetery contract or Health and Safety Code, Chapter
711 or Chapter 712. The definition is consistent with the consumer complaint
recordkeeping requirements established by §26.2(b)(2) of this title (relating
to What Records Am I Required to Maintain?) and with the broad language and
probable intent of Health and Safety Code, §712.008(b)(2). In defining
"consumer complaint" as proposed, the commission does not intend to expand
the types of complaints over which the department has substantive jurisdiction,
but, rather, to simply require a Cemetery to reply to all consumer complaints
in a timely manner and provide the consumer with certain basic information.
Proposed new §26.12(b) requires a Cemetery to respond in writing to
a written consumer complaint on or before the 30th day after the date the
Cemetery receives the complaint and specifies the information that must be
included in the response. Proposed new §26.12(c) requires a Cemetery
to keep records regarding consumer complaints in accordance with §26.2(b)(2)
of this title (relating to What Records Am I Required to Maintain?).
The proposed amendments to §26.2 and §26.11 conform the definitions
of "consumer complaint" in §26.2(a)(3) and "consumer" in §26.11(a)(1)
to the context in which these terms are used and to their meaning or definition
in the proposed new sections. The proposed amendment to the existing definition
of "consumer complaint" in §26.2(a)(3) is consistent with the consumer
complaint recordkeeping requirements established in §26.2(b)(2) and mirrors
the definition of "consumer complaint" in proposed new §26.12 of this
title (relating to What Must I Do If I Receive a Written Consumer Complaint?).
The definitional consistency that will be achieved as a result of the proposed
amendment will facilitate compliance with both §26.2 and proposed new §26.12.
Section 26.11 requires a Cemetery to tell a consumer how to file a complaint
with the department. Subsection (a) of that section defines terms. The proposed
amendment to the existing definition of "consumer" in §26.11(a)(1) specifically
references interment rights, merchandise and services and thus ties the definition
to the types of goods and services that are in fact purchased from or provided
by a perpetual care cemetery. The proposed amendment also clarifies who is
a "consumer" for purposes of filing a complaint regarding a perpetual care
cemetery. Finally, the proposed amendment to the definition of "You" or "I"
in §26.11(a)(4) corrects an erroneous reference to the Finance Code.
Stephanie Newberg, Deputy Commissioner, Texas Department of Banking, has
determined that, for each year of the first five years that the proposed amendments
and new sections are in effect, there will be no fiscal implication for state
or local government as a result of enforcing or administering the proposed
amendments and new sections.
Ms. Newberg has also determined that, for each of the first five years
the proposed amendments and new sections are in effect, the public will benefit
as a result of the adoption because the proposed new sections will insure
that cemetery corporations that own or operate perpetual care cemeteries governed
by Health and Safety Code, Chapter 712 respond to consumer complaints, and
order and install burial markers and monuments, in a timely manner. Additionally,
the proposed amendments and new sections will improve uniformity and consistency
and provide beneficial clarification. A person required to comply with the
proposed amendments and new sections will incur no economic cost, with the
possible exception that a Cemetery may incur minimal printing costs in connection
with providing purchasers of burial markers and monuments written notice of
the time requirements imposed by §26.14. There will be no deleterious
effect on small businesses.
Comments concerning the proposed new sections and amendments may be submitted
within 30 days of publication to Sarah Shirley, Assistant General Counsel,
Texas Department of Banking, 2601 North Lamar Boulevard, Suite 300, Austin,
Texas 78705-4294, or by e-mail to sarah.shirley@banking.state.tx.us.
The amendments and new sections are proposed under Health and
Safety Code, §712.008(b), which authorizes the commission to adopt rules
establishing reasonable standards for the timely placement of burial markers
and monuments in a perpetual care cemetery and the timely response to consumer
complaints regarding a perpetual care cemetery.
Health and Safety Code, Chapter 712, is affected by the proposed amendments
and new sections.
§26.2.What records am I required to maintain?
(a)
What unique defined terms are used in this section?
(1) - (2)
(No change.)
(3)
"Consumer complaint" means a written complaint
you
receive, either at your corporate office or your cemetery location, from a
consumer regarding the manner in which you operate your perpetual care cemetery
or perform your obligations under a perpetual care cemetery contract or Health
and Safety Code, Chapter 711 or Chapter 712. The term includes a written complaint
you receive either directly from the consumer or through the Department
[
(4)
(No change.)
(b) - (d)
(No change.)
§26.4.When must I order and set a burial marker or monument in my perpetual care cemetery?
(a)
Definitions.
(1)
"Department" means the Texas Department of Banking.
(2)
"Purchaser" means the person who signs the contract to
buy a burial marker or monument from you, and includes a person authorized
under the terms of the contract to act for such person in connection with
the contract. If such person is deceased and is the person for whom the marker
or monument has been purchased, the term also includes any person listed in
Health and Safety Code, §711.002(a), as you deem appropriate under the
circumstances.
(3)
"Set" means install or place.
(4)
"You" or "I" means a cemetery corporation that owns or
operates a perpetual care cemetery.
(b)
When must I order the purchaser's burial marker or monument?
You must order the marker or monument on or before the 10th day after the
date as of which both of the following events have occurred:
(1)
the purchaser pays you the amount you require to order
the marker or monument; and
(2)
the purchaser approves the design and lettering for the
marker or monument and signs the necessary documentation directing or authorizing
you to order the marker or monument.
(c)
When must I set the burial marker, once it has been delivered
to my cemetery location? You must set the marker on or before the 15th day
after the date as of which all of the following events have occurred:
(1)
the purchaser inspects and accepts the marker if you require
inspection and approval;
(2)
the purchaser pays you all amounts due under the contract
for the marker, including the amount due for the base if your cemetery requires
that a base be used with the marker; and
(3)
if the purchaser has stipulated in writing that the marker
be set later than required under this subsection, the purchaser asks you to
set the marker.
(d)
When must I set the burial monument, once it has been delivered
to my cemetery location? You must set the monument on or before the 25th day
after the date as of which all of the following events have occurred:
(1)
the purchaser inspects and accepts the monument if you
require inspection and approval;
(2)
the purchaser pays you all amounts due under the contract
for the monument, including the amount due for the foundation if your cemetery
requires that a foundation be used with the monument; and
(3)
if the purchaser has stipulated in writing that the monument
be set later than required under this subsection, the purchaser asks you to
set the monument.
(e)
What if I cannot set the burial marker or monument within
the time period required by subsection (c) or (d) of this section because
of inclement weather or other special circumstances? If you cannot set the
marker or monument within the required time period, you must notify the purchaser
in writing no later than the 5th day after the date by which the marker or
monument must be set under subsection (c) or (d) of this section. Your written
notice must:
(1)
if possible, state the date you expect to set the marker
or monument; and
(2)
provide an explanation of the delay.
(f)
Must I keep a written log related to the burial marker
or monument purchase and installation process to prove that I have complied
with this section? No. However, the purchaser's marker or monument contract
file must include all documentation necessary to verify and substantiate the
dates specified in subsections (b), (c), (d), and (e) of this section, as
applicable, and your compliance with this section.
(g)
Must I inform the purchaser of the date requirements established
by this section? Yes. You must provide written notice to the purchaser of
all of the date requirements in one of the following:
(1)
purchase agreement;
(2)
marker/monument order form;
(3)
cemetery rules and regulations; or
(4)
cemetery price list.
(h)
Does subsection (b) of this section apply to burial markers
or monuments the purchaser buys from someone other than my cemetery or an
affiliate of my cemetery? No. Subsection (b) applies to only those markers
and monuments purchased from you or from an affiliate of your cemetery. For
purposes of this subsection, an affiliate means a company that directly or
indirectly controls, is controlled by, or is under common control with you.
(i)
If a purchaser buys a burial marker or monument from a
vendor other than my cemetery and has it delivered to my cemetery, must I
install the marker or monument within the time period provided for in subsection
(c) or (d) of this section? Yes, provided:
(1)
the purchaser has paid you all amounts due for the space
or spaces in your cemetery on which the marker or monument will be set;
(2)
the purchaser or vendor has paid all setting fees; and
(3)
the marker or monument meets your cemetery's standards
requirements.
§26.11.How Do I Provide Information to Consumers on How to File a Complaint?
(a)
Definitions.
(1)
"Consumer" means
a person who obtains or has obtained
interment rights, merchandise or services from you under an agreement that
provides for perpetual care. For purposes of this section, the term includes:
[
(A)
a person authorized under the terms of
the agreement to act in connection with the agreement; and
(B)
if the person for whom such interment
rights, merchandise or services have been obtained is deceased, any person
listed in Health and Safety Code, §711.002(a).
(2) - (3)
(No change.)
(4)
"You" or "I" means a perpetual care cemetery that is certificated
by the Texas Department of Banking under the
Health and Safety Code
[
(b)
(No change.)
§26.12.What Must I Do If I Receive a Written Consumer Complaint?
(a)
Definitions.
(1)
"Consumer complaint" means a written complaint you receive,
either at your corporate office or your cemetery location, from a consumer
regarding the manner in which you operate your perpetual care cemetery or
perform your obligations under a perpetual care cemetery contract or Health
and Safety Code, Chapter 711 or Chapter 712. The term includes a written complaint
you receive either directly from the consumer or through the Department. The
term does not include an oral complaint.
(2)
"Department" means the Texas Department of Banking.
(3)
"You" or "I" means a cemetery corporation that owns or
operates a perpetual care cemetery.
(b)
When must I respond to a written consumer complaint and
what must my response include?
(1)
You must respond to the consumer complaint in writing on
or before the 30th day after the date you receive the consumer complaint.
(2)
In your written response, you must:
(A)
set out the actions you have taken or plan to take, with
a corresponding timeline, to resolve or otherwise dispose of the consumer
complaint; or
(B)
if you dispute the consumer complaint or do not believe
any corrective or other action is required, explain your conclusion and refer
to any supporting legal authority.
(3)
If the consumer complaint was forwarded to you by the Department,
you must send the Department a copy of your response on or before the 5th
day after the date you mail the response to the consumer.
(c)
Must I keep records of the consumer complaints I receive?
Yes. You must keep the records regarding consumer complaints in accordance
with the requirements of §26.2(b)(2) of this title (relating to What
records am I required to maintain?).
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308689
Everette D. Jobe
Certifying Official
Texas Department of Banking
Proposed date of adoption: February 20, 2004
For further information, please call: (512) 475-1300
Chapter 91.
CHARTERING, OPERATIONS, MERGERS, LIQUIDATIONS
Subchapter B. ORGANIZATION PROCEDURES
7 TAC §91.202
The Credit Union Commission has completed the review of Texas
Administrative Code Title 7, Chapter 91, §91.202 relating to forms of
and amendments to bylaws and articles of incorporation. Notice of the proposed
review was published in the September 19, 2003, issue of the
Texas Register
(28 TexReg 8153) for the purpose of accepting public
comment. No comments have been received. The Department believes that the
reasons for initially adopting these rules continue to exist. However, as
a result of legislative action, the Commission has determined from its review
of the Rule that a need exists for this proposed amendment.
The amendment implements a new provision enacted in the 78th Session of
the Legislature that was contained within HB 1307. The provision amended §122.011
of the Texas Finance Code making it no longer necessary for a credit union
to obtain the Commissioner's approval when they adopt standard bylaw amendments
that have been adopted by the Commission. The amendment establishes a procedure
for a board to adopt standard bylaw provisions without the Commissioner's
approval.
Kerri T. Galvin, General Counsel, has determined that for the first five-year
period the section is in effect there will be no fiscal implications for state
or local government as a result of enforcing or administering the proposed
rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be less paperwork and greater consistency
in credit union bylaw provisions. There is no anticipated effect on small
businesses as a result of adopting the amended rule. There is no economic
cost anticipated to credit unions for complying with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The amendment is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code.
The specific sections affected by the proposed amendment are Texas Finance
Code, §§122.002, 122.005, and 122.011.
§91.202.Form of Bylaws; Amendments to Articles of Incorporation and Bylaws.
(a)
The Standard Bylaws for State Chartered Credit Unions
("Standard Bylaws")
, adopted by the commission in
2002
[
(b) - (f)
(No change.)
(g)
A credit union's board of directors
may amend its bylaws to adopt any standard bylaw without approval by the commissioner
provided:
(1)
the wording of the amendment is identical to the Standard
Bylaws; and
(2)
the credit union submits a completed, fully executed Certification
of Resolution of Amendment to Credit Union Bylaws ("Certification") to the
commissioner. The commissioner will promptly acknowledge receipt of the Certification.
The amendment will be effective as of the date the commissioner acknowledges
receipt of the Certification.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308646
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.206
The Credit Union Commission proposes a new §91.206,
relating to underserved area credit unions to comply with recent legislation.
The new rule implements a new provision enacted in the 78th Session of
the Legislature that was contained within House Bill 1307. The provision added
a new §122.014 to the Texas Finance Code giving the Commission the authority
to adopt rules for the organization and operation of underserved area credit
unions, including rules concerning secondary capital accounts for underserved
credit unions. The proposed new rule establishes the criteria a credit union
must follow to issue secondary capital accounts.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed new rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed new rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be compliance with new legislation and increased
safety and soundness for credit unions who issue secondary capital accounts.
There is no anticipated effect on small businesses as a result of adopting
the new rule. There is no economic cost anticipated to credit unions for complying
with the new rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The new rule is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code and under §122.014 of the Texas Finance Code which authorizes
the commission to adopt rules concerning secondary capital accounts.
The specific section affected by the proposed new rule is Texas Finance
Code, §122.014.
§91.206.Underserved Area Credit Unions--Secondary Capital Accounts.
A credit union having been approved for a designation as a Underserved
Area Credit Union pursuant to §122.014, Finance Code may issue secondary
capital accounts to members or nonmembers of the credit union on the following
conditions:
(1)
Prior to offering secondary capital accounts, the credit
union shall file an application for approval with the commissioner, supported
by a written plan for use of the funds in the secondary capital accounts and
subsequent liquidity needs to meet repayment requirements upon maturity of
the accounts, along with such other information and data as the commissioner
may require.
(2)
The secondary capital account must be established as an
uninsured secondary capital account or other form of non-share account, and
shall not be insured by the National Credit Union Share Insurance Fund or
any governmental or private entity.
(3)
The maturity of the secondary capital account must be for
a minimum of five years.
(4)
The secondary capital account shall not be redeemable prior
to maturity.
(5)
The secondary capital account holder's claim against the
credit union must be subordinated to all other claims, including those of
shareholders, creditors and the credit union's insuring organization.
(6)
Funds deposited into the secondary capital account, including
interest accrued and paid into the capital account, must be available to cover
operating losses realized by the credit union that exceed its net available
reserves and undivided earnings (i.e., reserves and undivided earnings exclusive
of allowance accounts for loan losses), and to the extent funds are so used,
the credit union shall not restore or replenish the account. The credit union
may, in lieu of paying interest into the secondary capital account, pay interest
accrued on the secondary capital account directly to the secondary capital
account holder or into a separate account from which the secondary capital
account holder may make withdrawals. Losses realized shall be distributed
pro-rata among all secondary capital accounts held by the credit union at
the time the losses are realized.
(7)
The secondary capital account may not be pledged or provided
by the account holder as security on a loan or other obligation with the credit
union or any other party.
(8)
In the event of merger or other voluntary dissolution of
the credit union, other than merger into another Underserved Area designated
credit union, the secondary capital accounts will, to the extent they are
not needed to cover losses at the time of merger or dissolution, be closed
and paid out to the account holder.
(9)
A secondary capital account contract agreement must be
executed by an authorized representative of the account holder and the credit
union which sets forth all of the terms and conditions of this section and
contains a disclosure and acknowledgement by the account holder that the secondary
capital account is not redeemable, will not be insured, may be used to cover
operating losses of the credit union and not be replaced or replenished, and
is subordinate to all other claims on the assets of the credit union, including
claims of member shareholders, creditors and the credit union's insuring organization.
All such contract agreements must be retained by the credit union for the
term of the agreement.
(10)
In the event the credit union is classified as "critically
under capitalized", "marginally capitalized", "minimally capitalized", "moderately
capitalized" or "uncapitalized", or the credit union has failed to undertake
any mandatory supervisory action, the commissioner or any entity insuring
the accounts of the credit union, may prohibit payment of principal, dividends
or interest on the credit union's secondary capital accounts in accordance
with powers and procedures granted under state or federal laws, as applicable.
Any such unpaid dividends or interest shall continue to accrue under the terms
of the account to the extent permitted by law.
(11)
Credit unions with secondary capital accounts shall record
the funds on its balance sheet in an equity account entitled "uninsured secondary
capital accounts". The capital value of the accounts shall be kept in accordance
with generally accepted accounting principles.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308662
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.401
(Editor's note: The text of the following section proposed for
repeal will not be published. The section may be examined in the offices of
the Credit Union Department or in the Texas Register office, Room 245, James
Earl Rudder Building, 1019 Brazos Street, Austin.)
The Credit Union Commission has completed the review
of Texas Administrative Code Title 7, Chapter 91, §91.401 relating to
operational powers. Notice of the proposed review was published in the September
19, 2003, issue of the
Texas Register
(28
TexReg 8153) for the purpose of accepting public comment. No comments have
been received. However, the Commission has determined from its review of the
Rule that a need exists to repeal this rule and to adopt several new rules
in its place.
After conducting a preliminary review of §91.401, the Commission determined
that because of the many unrelated subsection of this rule, it would be less
confusing to credit unions and to the general public to repeal the existing
rule and to adopt the subsections as individual new rules. In conjunction
with the repeal of §91.401, the Commission is proposing the adoption
of the following new rules: §91.401, replacing §91.401(a); §91.402,
replacing §91.401(f); §91.406, replacing §91.401(c); §91.407,
replacing §91.401(d); §91.408, replacing §91.401(e); and §91.409,
replacing §91.401(b).
Kerri T. Galvin, General Counsel, has determined that for the first five-year
period the section is in effect there will be no fiscal implications for state
or local government as a result of enforcing or administering the proposed
rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be greater clarity and ease of use of the proposed
new rules following the repeal. There is no anticipated effect on small businesses
as a result of adopting the rule. There is no economic cost anticipated to
credit unions for complying with the rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The repeal is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code.
The specific sections affected by the proposed repeal is Texas Finance
Code, §§123.103, 123.107, 122.011, 123.001, 123.002, 125.002, 125.003,
125.103, 125.504, 125.505, 125.507,125.510, 15.4032, 122.012, 123.106, 123.202,
and 123.203.
§91.401.Operational Powers.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308799
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.401
The Credit Union Commission has completed the review of Texas
Administrative Code Title 7, Chapter 91, §91.401, relating to operational
powers. Notice of the proposed review was published in the September 19, 2003,
issue of the
Texas Register
(28 TexReg 8153)
for the purpose of accepting public comment. No comments have been received.
However, the Commission has determined from its review of the Rule that a
need exists for the repeal of the current §91.401 and the addition of
this proposed new §91.401.
The Credit Union Commission proposes a new rule §91.401 relating to
the purchase, lease or sale of fixed assets. The new rule replaces the existing §91.401(a)
establishing this subject matter as a separate rule and making certain substantive
changes.
The new rule is proposed to allow more flexibility to credit unions for
investments in fixed assets and will result in reduced regulatory burden for
well-capitalized credit unions. In particular, the new rule modifies the former
rule to change the fixed asset limitation from 5% of total assets to the lesser
of 70% of the credit union's retained earnings or 6% of total assets. The
proposed rule also requires any credit union requesting a waiver of this limitation
to provide evidence that the increase in operating expenses caused by the
project can be supported after accounting for the current level of expenses
and dividend commitments.
Kerri T. Galvin, General Counsel, has determined that for the first five-year
period the section is in effect there will be no fiscal implications for state
or local government as a result of enforcing or administering the proposed
rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be increased safety and soundness of credit unions.
There is no anticipated effect on small businesses as a result of adopting
the rule. There is no economic cost anticipated to credit unions for complying
with the rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The new rule is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code.
The specific section affected by the proposed rule is Texas Finance Code, §123.103.
§91.401.Purchase, Lease, or Sale of Fixed Assets.
(a)
Definitions. For the purposes of this rule, the term "fixed
assets" means real property, premises, and furniture, fixtures and equipment
as defined herein. Premises include real property with any improvements or
leasehold interest where the credit union transacts or intends to transact
business. Furniture, fixtures and equipment includes all office furnishings
(e.g. tables, chairs, desks, file cabinets, curtains, drapes, rugs, etc.),
office machines, word processing equipment, computer hardware and software,
automated terminals, and heating and cooling equipment. The term does not
extend to any real property which may be conveyed to the credit union in satisfaction
of debts previously contracted in the course of business, nor to such real
estate as the credit union shall purchase at sale on judgments, decrees, mortgage
or deed of trust foreclosures under a security agreement held by the credit
union, but a credit union shall not bid at such sale a larger amount than
is necessary to satisfy the debts and costs owed the credit union.
(b)
Limitations. A credit union may purchase fixed assets or
enter into a contract for the purchase or lease of fixed assets primarily
for its own use in conducting business if the aggregate of all such investments
does not exceed the lesser of 70% of the credit union's retained earnings
or six percent of total assets.
(c)
Restrictions. A credit union shall not purchase real estate
(land or buildings) for the principal purpose of engaging in real estate rentals
or speculation.
(d)
Transactions with insiders. Without the prior approval
of a disinterested majority of the board of directors recorded in the minutes
or, if a disinterested majority cannot be obtained, the prior written approval
of the commissioner, a credit union may not directly or indirectly:
(1)
sell or lease an asset of the credit union to a director,
committee member, or senior executive staff; or
(2)
purchase or lease an asset in which a director, committee
member, or senior management staff has an interest.
(e)
Use requirement. If real property or leasehold interest
is acquired for future expansion, the credit union must partially satisfy
the "primarily for its own use in conducting business" requirement within
five years after the credit union makes the investment.
(f)
Waiver. The commissioner may, upon written application,
waive or modify any of the limitations or restrictions placed on the investment
of fixed assets.
(g)
Written application. A credit union shall submit such statements
and reports as the commissioner may, in his discretion, require in support
of a waiver or modification of the limits imposed upon the investment of fixed
assets. Such reports and statements shall include but not be limited to:
(1)
a description of the proposal in terms of cost, usage,
location and method of financing;
(2)
a statement of the economic advantage and disadvantages
relating to the proposed investment;
(3)
evidence that the increase in operating expenses caused
by the project can be supported after accounting for the current level of
expenses and dividend commitments; and
(4)
the credit union's latest balance sheet, income statement
and loan delinquency report.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308648
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.402
The Credit Union Commission has completed the review of Texas
Administrative Code Title 7, Chapter 91, §91.401, relating to operational
powers. Notice of the proposed review was published in the September 19, 2003,
issue of the
Texas Register
(28 TexReg 8153)
for the purpose of accepting public comment. No comments have been received.
However, the Commission has determined from its review of the rule that a
need exists for the repeal of the current §91.401 and the addition of
this proposed new §91.402.
The Texas Credit Union Commission proposes a new §91.402, relating
to the insurance for members. The new rule replaces the existing §91.401(f)
establishing this subject matter as a separate rule and making certain substantive
changes.
The new rule is proposed to provide greater clarity and ease of use of
the rule. The new rule modifies the former rule to comply with federal legislation
that deals with privacy and protection of member information. Specifically
it removes the affirmative authorization for credit unions to furnish membership
lists to an insurance carrier or agent.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed new rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed new rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be increased privacy rights of members of credit
unions. There is no anticipated effect on small businesses as a result of
adopting the new rule. There is no economic cost anticipated to credit unions
for complying with the new rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The new rule is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code.
The specific section affected by the proposed new rule is Texas Finance
Code, §123.107.
§91.402.Insurance for Members.
A credit union may make insurance programs available to its members,
including insurance programs at the individual member's own expense, if the
following conditions are complied with:
(1)
The purchase of any type of insurance coverage by a member
is voluntary, except as provided in paragraph (2) of this section, and a copy
of the written election to purchase the insurance is on file at the credit
union.
(2)
Subject to reasonable requirements, if the insurance is
a condition of a loan, the member who is borrowing may purchase or provide
the insurance from a carrier of the member's choice, or the member who is
borrowing may assign any existing insurance coverage.
(3)
An officer, director, employee, or committee member of
a credit union may not accept anything of value from an insurance agent, insurance
company, or other insurance provider offered to corruptly induce the credit
union to sell or offer to sell insurance or other related products or services
to the members of the credit union.
(4)
If a credit union replaces an existing loan or renews a
loan and sells the member new credit life or disability insurance, the credit
union shall cancel the prior insurance and provide the member with a refund
or credit of the unearned premium or identifiable charge before selling the
new insurance to the member.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308655
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.406
The Credit Union Commission has completed the review of Texas
Administrative Code Title 7, Chapter 91, §91.401, relating to operational
powers. Notice of the proposed review was published in the September 19, 2003,
issue of the
Texas Register
(28 TexReg 8153)
for the purpose of accepting public comment. No comments have been received.
However, the Commission has determined from its review of the rule that a
need exists for the repeal of the current §91.401 and the addition of
this proposed new §91.406.
The Texas Credit Union Commission proposes a new §91.406, relating
to the credit union service contracts. The new rule replaces the existing §91.401(c)
establishing this subject matter as a separate rule and making one substantive
change.
The new rule is proposed to provide greater clarity and ease of use of
the rule. The new rule modifies the former rule to comply with a new provision
enacted in the 78th Session of the Legislature that was contained within House
Bill 1307. The provision added a new §15.4032, Texas Finance Code, limiting
the scope of the rule to those contracts that deal with electronic data processing,
electronic funds transfers, or other member services on behalf of the credit
union.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed new rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed new rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be compliance with amendments made to §15.4032,
Texas Finance Code. There is no anticipated effect on small businesses as
a result of adopting the new rule. There is no economic cost anticipated to
credit unions for complying with the new rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The new rule is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code.
The specific section affected by the proposed new rule is Texas Finance
Code, §15.4032.
§91.406.Credit Union Service Contracts.
A credit union may enter into contractual agreements with one or more
credit unions or other organizations for the purpose of engaging in authorized
activities that relate to electronic data processing, electronic fund transfers,
or other member services on behalf of the credit union. Agreements must be
in writing and shall advise all parties that the activities and services may
be subject to commission rules and examination by the commissioner to the
extent permitted by law.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308656
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.407
The Credit Union Commission has completed the review of Texas
Administrative Code Title 7, Chapter 91, §91.401, relating to operational
powers. Notice of the proposed review was published in the September 19, 2003,
issue of the
Texas Register
(28 TexReg 8153)
for the purpose of accepting public comment. No comments have been received.
However, the Commission has determined from its review of the rule that a
need exists for the repeal of the current §91.401 and the addition of
this proposed new §91.407.
The Texas Credit Union Commission proposes a new §91.407, relating
to electronic notification. The new rule replaces the existing §91.401(d)
establishing this subject matter as a separate rule with no substantive changes.
The new rule is proposed to provide greater clarity and ease of use of
the rule.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed new rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed new rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be greater clarity and ease of use of the rule.
There is no anticipated effect on small businesses as a result of adopting
the new rule. There is no economic cost anticipated to credit unions for complying
with the new rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The new rule is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code.
The specific sections affected by the proposed new rule are Texas Finance
Code, §§122.011, 123.001, 123.002, 125.002, 125.003, 125.103, 125.504,
125.505, 125.507,125.510.
§91.407.Electronic Notification.
A credit union may, in accordance with written board policy, satisfy
any "written" member notification requirement of the Act, commission rules,
or the credit union's bylaws by electronic means provided:
(1)
the member agrees in writing or electronically to use electronic
instead of hard-copy notifications;
(2)
the member has the ability to print or download the notification;
(3)
evidence of the electronic notification is retained in
accordance with §91.405 of this title (relating to Records Retention);
and
(4)
both the credit union and the member have the capacity
to receive electronic messages.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308658
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.408
The Credit Union Commission has completed the review of Texas
Administrative Code Title 7, Chapter 91, §91.401, relating to operational
powers. Notice of the proposed review was published in the September 19, 2003,
issue of the
Texas Register
(28 TexReg 8153)
for the purpose of accepting public comment. No comments have been received.
However, the Commission has determined from its review of the rule that a
need exists for the repeal of the current §91.401 and the addition of
this proposed new §91.408.
The Texas Credit Union Commission proposes a new §91.408, relating
to user fees for shared electronic terminals. The new rule replaces the existing §91.401(e)
establishing this subject matter as a separate rule with no substantive changes.
The new rule is proposed to provide greater clarity and ease of use of
the rule.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed new rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed new rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be greater clarity and ease of use of the rule.
There is no anticipated effect on small businesses as a result of adopting
the new rule. There is no economic cost anticipated to credit unions for complying
with the new rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The new rule is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code.
The specific sections affected by the proposed new rule are Texas Finance
Code, §§123.001, 123.002, 123.202, and 123.203.
§91.408.User Fee for Shared Electronic Terminal.
A credit union that owns an electronic terminal that is connected to
a shared network may impose a fee on a non-member for the use of that terminal
if imposition of the fee is disclosed in compliance with applicable federal
law.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308657
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.409
The Credit Union Commission has completed the review of Texas
Administrative Code Title 7, Chapter 91, §91.401, relating to operational
powers. Notice of the proposed review was published in the September 19, 2003,
issue of the
Texas Register
(28 TexReg 8153)
for the purpose of accepting public comment. No comments have been received.
However, the Commission has determined from its review of the rule that a
need exists for the repeal of the current §91.401 and the addition of
this proposed new §91.409.
The Texas Credit Union Commission proposes a new §91.409, relating
to permanent closing of an office or operation. The new rule replaces the
existing §91.401(b) establishing this subject matter as a separate rule
with no substantive changes.
The new rule is proposed to provide greater clarity and ease of use of
the rule.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed new rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed new rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be greater clarity and ease of use of the rule.
There is no anticipated effect on small businesses as a result of adopting
the new rule. There is no economic cost anticipated to credit unions for complying
with the new rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The new rule is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code.
The specific section affected by the proposed new rule are Texas Finance
Code, §§122.012, 123.001, 123.002, and 123.106.
§91.409.Permanent Closing of an Office or Operation.
A credit union may permanently close any of its established offices.
The credit union shall provide notice to its members and the department no
later than 60 days prior to the proposed closing. The credit union shall also
post a notice to members in a conspicuous manner on the premises of the effected
office at least 30 days prior to the proposed closing.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308659
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.501
The Credit Union Commission has completed the review of Texas
Administrative Code Title 7, Chapter 91, §91.501, relating to eligibility
to hold office. Notice of the proposed review was published in the September
19, 2003, issue of the
Texas Register
(28
TexReg 8153) for the purpose of accepting public comment. No comments have
been received. The Department believes that the reasons for initially adopting
this rule continue to exist. However, as a result of legislative action, the
Commission has determined from its review of the rule that a need exists for
this proposed amendment.
The amendment implements a new provision enacted in the 78th Session of
the Legislature that was contained within House Bill 1307. The amended §122.055(a)
of the Texas Finance Code requires the Commission to adopt a rule to prescribe
the total number of absences that a director may have before his/her office
becomes vacant. The proposed amendment utilizes the same criteria that the
Commission adopted in its most recent version of the Standard Bylaws for State
Chartered Credit Unions.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed amendment.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be greater consistency and compliance
with new legislation. There is no anticipated effect on small businesses as
a result of adopting the amended rule. There is no economic cost anticipated
to credit unions for complying with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The amendment is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code and under Texas Finance Code §122.055(a) which requires
the commission to adopt a rule to prescribe the total number of absences that
a director may have before his/her office becomes vacant.
The specific section affected by the proposed amendment is Texas Finance
Code, §122.055.
§91.501.Eligibility to Hold Office.
(a) - (f)
(No change.)
(g)
Absences. The office of a director becomes
vacant upon the convening of a regular board meeting, when a director fails
to attend three (3) consecutive regular meetings without due cause, or when
a director fails to attend six (6) regular meetings within any twelve-month
period following the director's election or appointment. A new individual
shall be appointed to fill any vacancies occurring in this manner within sixty
days, unless extended by approval of the commissioner.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308660
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.515
The Credit Union Commission has completed the review of Texas
Administrative Code Title 7, Chapter 91, §91.515, relating to financial
reporting. Notice of the proposed review was published in the September 19,
2003, issue of the
Texas Register
(28 TexReg
8153) for the purpose of accepting public comment. No comments have been received.
The Department believes that the reasons for initially adopting the rule continue
to exist. However, as a result of legislative action, the Commission has determined
from its review of the rule that a need exists for this proposed amendment.
The amendment implements a new provision enacted in the 78th Session of
the Legislature that was contained within House Bill 1307. The provision amended §122.101(a)
of the Texas Finance Code requiring credit unions to submit call reports quarterly
instead of semi-annually. The proposed amendment makes the rule conform to
the new legislation.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed amendment.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be compliance with new legislation. There
is no anticipated effect on small businesses as a result of adopting the amended
rule. There is no economic cost anticipated to credit unions for complying
with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The amendment is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code.
The specific section affected by the proposed amendment is Texas Finance
Code, §122.101.
§91.515.Financial Reporting.
(a) - (b)
(No change.)
(c)
In addition to the
quarterly
[
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308661
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.701
The amendments to the rule are proposed as a result of the
passage of Proposition 16, which amended the Texas Constitution to allow credit
unions to offer home equity lines of credit (HELOCs). In accordance with Article
16, Chapter 50 of the Texas Constitution, HELOCs are considered to be authorized
home equity loans. The amendment clarifies that the amortization schedule
for a HELOC shall not exceed 20 years.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be compliance with a new constitutional
amendment and greater clarity for credit unions and the public regarding the
amortization limit allowed for HELOCs. There is no anticipated effect on small
businesses as a result of adopting the amended rule. There is no economic
cost anticipated to credit unions for complying with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the Texas Register to Kerri T. Galvin, General Counsel,
Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.
The amendment is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code.
The specific sections affected by the proposed amendment are Texas Finance
Code, §124.052 and §124.201.
§91.701.Lending Powers.
(a) - (c)
(No change.)
(d)
Except when a higher maturity date is provided for elsewhere
in this chapter, the maturity of a loan to a member may not exceed 15 years
unless the purpose of the loan is to finance the purchase of a manufactured
home and the loan is secured by a first lien, in which case the maturity may
not exceed 20 years. Open-end credit is not subject to a regulatory maturity
limit. However, the amortization scheduling on a line of credit balance shall
not exceed 15 years
, unless it is a home equity line of credit, in which
case, the amortization scheduling on the balance shall not exceed 20 years
.
(e)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308668
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.709
The amendments to the rule are proposed as a result of the
adoption of federal regulations creating a more permissive member business
loan regulation for federal credit unions. In keeping with the "parity" provisions
of §123.003, Texas Finance Code, the Department felt that a revision
of §91.709 was necessary to provide as much flexibility for state chartered
credit unions as the federal chartered credit unions now enjoy.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be keep Texas chartered credit unions
on par with federal chartered credit unions in connection with member business
loans thereby offering more competition in the market for the public. There
is no anticipated effect on small businesses as a result of adopting the amended
rule. There is no economic cost anticipated to credit unions for complying
with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The amendment is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code. This amendment is also proposed under §123.003, Finance
Code. The Commission interprets this section as authorizing it, in conjunction
with the exercise of its specific rulemaking authority, to adopt rules reflecting
the statutory right of state chartered credit unions to engage in any activity,
exercise any power, or make any loan or investment, that they could engage
in, exercise, or make if they were chartered as federal credit unions.
The specific sections affected by the proposed amendment are Texas Finance
Code, §124.001 and §124.003.
§91.709.Member Business Loans.
(a)
A member business loan is defined as any loan, line of
credit, or letter of credit, the proceeds of which will be used for a commercial,
corporate, business investment property or venture, or agricultural purpose,
except that the following shall not be considered a member business loan for
the purposes of this rule:
(1)
A loan secured by a lien on a 1- to 4-family dwelling that
is the member's primary residence;
(2)
A loan fully secured by shares in the credit union making
the extension of credit or deposits in other financial institutions;
(3)
A loan to another credit union or a credit
union service organization;
(4)
[
(5)
[
(b)
A credit union with a net worth ratio greater than 6% may
make member business loans subject to the conditions of this section. The
aggregate limit on a credit union's
net member business loan balances
[
(c)
Any interest a credit union obtains in
a loan that was made by another lender to the credit union's member is a member
business loan, for purposes of this rule, to the same extent as if made directly
by the credit union to its member.
(d)
If a credit union holds any nonmember
loan participation investments that would constitute a member business loan
if made to a member, those investments will affect the aggregate limit on
a credit union's net member business loan balances as follows:
(1)
The total of the credit union's net member business loan
balances and the nonmember participation investments must not exceed the lesser
of 1.75 times the credit union's net worth or 12.25% of the credit union's
total assets, unless the credit union has first received approval from the
commissioner.
(2)
To request approval from the commissioner, a credit union
must submit a letter application that:
(A)
includes a current copy of the credit union's member business
loan policies;
(B)
confirms that the credit union is in compliance with all
other aspects of this rule;
(C)
states the credit union's proposed limit on the total amount
of nonmember loan participation investments that the credit union may acquire
if the application is granted; and
(D)
attests that the acquisition of nonmember loan participation
investments is not being used, in conjunction with one or more other credit
unions, to have the effect of trading member business loans that would otherwise
exceed the aggregate limit.
(3)
The commissioner shall deny a request to exceed the aggregate
limit on member business loans, or may revoke a previously approved increased
aggregate limit, if the commissioner determines that:
(A)
the treatment of loan purchases or participation interest
will or has resulted in circumvention of the aggregate limit;
(B)
the credit union's level of capital is not commensurate
with that needed to support the additional risks that will be or has been
incurred; or
(C)
the performance of the activity by the credit union
will or has adversely affected the safety and soundness of the credit union.
(e)
[
(f)
[
(1)
a credit card line of credit granted to nonnatural persons
that is limited to routine purposes normally made available under such lines
of credit; and
(2)
a loan made by a credit union under the following conditions:
(A)
the amount of the loan does not exceed one hundred thousand
dollars;
(B)
the aggregate of all unsecured member business
loans does not exceed ten percent of the credit union's net worth; and
(C)
[
(g)
[
(1)
the loan is secured by collateral on which the credit
union will have a first mortgage lien, and the loan is:
(A)
covered
[
(B)
[
(2)
the loan is to purchase a car, van, pick-up
truck, or sport utility vehicle and is not part of a fleet of vehicles. The
LTV ratio and the term for this vehicle loan must be consistent with the depreciation
schedule of any vehicle used for a particular type of business.
(h)
[
(1)
Types of business loans to be made and collateral requirements
for each type of loan.
(2)
The maximum amount of
net member business loan balances
[
(3)
The maximum amount of any given category or type of member
business loan relative to the credit union's net worth.
(4)
The maximum amount that will be loaned to any one member
or group of associated members, subject to subsection (c) of this section.
(5)
The qualifications and experience requirements for personnel
involved in making and servicing business loans.
(6)
A requirement for analysis of the member's initial and
ongoing financial capacity to repay the debt.
(7)
Documentation sufficient to support each request for an
extension of credit or an increase in an existing loan or line of credit,
except where the board of directors finds that the required documentation
is not reasonably available for a particular type of loan and states the reasons
for those findings in the credit union's written policy. At a minimum, the
documentation must include the following:
(A)
A balance sheet;
(B)
An income statement;
(C)
A cash flow analysis;
(D)
Income tax data;
(E)
Analysis of leveraging; and
(F)
Receipt and the periodic updating of financial statements,
income tax data, and other documentation.
(8)
Collateral requirements which include all of the following:
(A)
Loan-to-value (LTV) ratios;
(B)
Appraisal, title search, and insurance requirements; and
(C)
Steps to be taken to secure various types of collateral.
(9)
Identification, by position, of the officials and senior
management employees who are prohibited from receiving member business loans
which, at a minimum, shall include the credit union's chief executive officer,
any assistant chief executive officers, the chief financial officer, and any
associated member or immediate family member of such persons.
(10)
Guidelines for purchase and sale of member business loans
and loan participations, if the credit union engages in that activity.
(i)
[
(1)
The aggregate of all construction and development loans
must not exceed 15% of the credit union's net worth. To determine the aggregate,
a credit union may exclude any portion of a loan:
(A)
Secured by shares in the credit union;
(B)
Secured by deposits in another financial institution;
(C)
Fully or partially insured or guaranteed by any agency
of the federal government, state, or its political subdivisions; or
(D)
Subject to an advance commitment to purchase by an agency
of the federal government, state, or its political subdivisions;
(2)
The member borrower on such loans must have a minimum of:
(A)
30% equity interest in the project being financed if the
loan is for land development; or
(B)
25% equity interest in the project being financed if the
loan is for construction or for combination of development and construction;
and
(3)
The funds may be released only after on-site, written inspections
by qualified personnel and according to a preapproved draw schedule and any
other conditions as set forth in the loan documentation.
(j)
[
(1)
Associated member--means any member with a common ownership,
investment, or other pecuniary interest in the business or agricultural endeavor
for which the business loan is being made.
(2)
Net Member Business Loan Balance--means
the outstanding loan balance plus any unfunded commitments, reduced by any
portion of the loan that is secured by shares in the credit union, or by shares
or deposits in other financial institutions, or by a lien in the member's
primary residence, or insured or guaranteed by any agency of the federal government,
a state or any political subdivision of such state, or subject to an advance
commitment to purchase by any agency of the federal government, a state or
any political subdivision of such state, or sold as a participation interest
without recourse and qualifying for true sales accounting under generally
accepted accounting principles.
(3)
[
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308669
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.719
The Credit Union Commission proposes amendments to §91.719
concerning loans to officials and employees.
The amendment implements a new provision enacted in the 78th Session of
the Legislature that was contained within HB 1307. The provision amended §124.201
of the Texas Finance Code to make restrictions only applicable to senior management
employees. The amendment makes conforming changes to the rule.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be compliance with new legislation. There
is no anticipated effect on small businesses as a result of adopting the amended
rule. There is no economic cost anticipated to credit unions for complying
with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the Texas Register to Kerri T. Galvin, General Counsel,
Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.
The amendment is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code.
The specific section affected by the proposed amendment is Texas Finance
Code, §124.201.
§91.719.Loans to Officials and Senior Management Employees.
(a)
The rates, terms, conditions, and availability of any loan
or other extension of credit made to, or endorsed or guaranteed by, a director,
senior management
employee, member of the credit committee or an immediate
family member of any such individual shall not be more favorable than the
rates, terms, conditions, and availability of comparable loans or credit to
other credit union members.
(b)
Before making a loan, extending credit, or becoming contractually
liable to make a loan or extend credit to a director,
senior management
employee, member of the credit committee, or an immediate family member
of such individual, the board of directors must approve the transaction if
the loan or the extension of credit or aggregate of outstanding loans and
extensions of credit to any one person, the person's business interests, and
the members of the person's immediate family is greater than 15% of the credit
union's net worth . A loan fully secured by shares in the credit union or
deposits in other financial institutions shall not be subject to, or included
in the aggregate amounts included in this section.
(c)
For purposes of this section,
senior management employees
shall include the chief executive officer, any assistant chief executive officers
(e.g. vice presidents and above), and the chief financial officer; and immediate
family members shall include a person's spouse or any other person living
in the same household.
[
(d)
The aggregate of all outstanding loans or extensions of
credit made to, or endorsed or guaranteed by all directors, credit committee
members, senior
management employees
[
(e)
At least semiannually, the president shall make a report
to the board of directors on the outstanding indebtedness of all directors,
credit committee members, senior
management employees
[
(1)
The amount of each indebtedness; and
(2)
A description of the terms and conditions (including the
interest rate, the original amount and date, maturity date, payment terms,
security, if any, and any other unusual term or condition) of each extension
of credit.
(f)
At the discretion of the Board, the reporting requirement
of subsection (e) of this section may be waived if the aggregate of outstanding
loans and extensions of credit to any one person, the person's business interests,
and the members of the person's immediate family is less than $25,000.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308672
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.7000
The Credit Union Commission proposes a new §91.7000
relating to certificates of indebtedness to comply with recent legislation.
The new rule implements a new provision enacted in the 78th Session of
the Legislature that was contained within HB 1307. The provision added a new
section 123.211 to the Texas Finance Code giving the Commission the authority
to adopt rules for the issuance of certificates of indebtedness. The proposed
new rule establishes the criteria a credit union must meet in order to issue
certificates of indebtedness.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be compliance with new legislation and
increased safety and soundness for credit unions who issue certificates of
indebtedness. There is no anticipated effect on small businesses as a result
of adopting the amended rule. There is no economic cost anticipated to credit
unions for complying with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The amendment is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code and under §123.211 of the Texas Finance Code which authorizes
the commission to adopt rules relating to the issuance of certificates of
indebtedness.
The specific section affected by the proposed amendment is Texas Finance
Code, §123.211.
§91.7000.Certificates of Indebtedness.
(a)
General. No credit union may issue certificates of indebtedness
pursuant to this section or amend the terms of such certificates unless it
has obtained a written letter from the commissioner stating that the commissioner
does not object ("non-objection letter"). All requirements of the provisions
of this section must be met before a non-objection letter will be issued.
(b)
Form of application; supporting information. Applications
must be in the form prescribed by the commissioner and shall include all information
and exhibits required by the application instructions.
(c)
Requirements as to certificates. Certificates of Indebtedness
issued pursuant to this section shall meet all of the following requirements:
(1)
Form of certificate. Each certificate evidencing subordinated
debt issued by a credit union pursuant to this section shall:
(A)
Bear on its face, in bold-face type, the following legends:
(i)
"This certificate is not a share account or deposit and
it is not insured by the United States or any other insuring organization
or fund"; and
(ii)
"This certificate is not eligible for purchase by any
credit union or a credit union service organization thereof without the prior
written approval of the Credit Union Commissioner of the State of Texas."
(B)
Clearly state that the certificate -
(i)
Is subordinated to all other claims of the credit union's
creditors;
(ii)
Is totally unsecured; and
(iii)
May not be used as collateral for any loan by the issuing
credit union.
(C)
Shall include within its terms the right of the issuing
credit union to prepay the obligation, which shall, at a minimum, include
the right to prepay any amount without premium or penalty any time during
the fifteen months prior to the maturity date;
(D)
Shall contain the following statement: "Notwithstanding
anything to the contrary in this certificate (or in any related documents);
(i)
if the NCUA or other insuring organization shall be appointed
liquidating agent for the issuer of this certificate ("the issuer') and in
its capacity as such shall cause the issuer to merge with or into another
credit union, or in such capacity shall sell or otherwise convey part or all
of the assets of the issuer to another credit union or shall arrange for the
assumption of less than all of the liabilities of the issuer by one or more
credit unions, the NCUA or other insuring organization shall have no obligation,
either in its capacity as liquidating agent or in its corporate capacity,
to contract for or to otherwise arrange for the assumption of the obligations
represented by this certificate in whole or in part by any credit union or
credit unions which results from any such merger or which has purchased or
otherwise acquired from the NCUA or other insuring organization as liquidating
agent for the issuer, any of the assets of the issuer, or which, pursuant
to any arrangement with the NCUA or insuring organization, has assumed less
than all of the liabilities of the issuer. To the extent that obligations
represented by this certificate have not been assumed in full by a credit
union with or into which the issuer may have been merged, as described in
this paragraph (A), and/or by one or more credit unions which have succeeded
to all or a portion of the assets of the issuer, or which have assumed a portion
but not all of the liabilities of the issuer as a result of one or more transactions
entered into by the NCUA or other insuring organization as liquidating agent
for the issuer, then the holder of this certificate shall be entitled to payments
on this obligation in accordance with the procedures and priorities set forth
in any applicable law.
(ii)
In the event that the obligation represented by this certificate
is assumed in full by another credit union, which shall succeed by merger
or otherwise to substantially all of the assets and the business of the issuer,
or which shall by arrangement with the NCUA or insuring organization assume
all or a portion of the liabilities of the issuer, and payment or provision
for shall have been made in respect of all matured installments of interests
upon the certificates together with all matured installments of principal
on such certificates which shall have become due otherwise than by acceleration,
than any default caused by the appointment of a liquidating agent for the
issuer shall be deemed to have been cured, and any declaration consequent
upon such default declaring the principal and interest on the certificate
to be immediately due and payable shall be deemed to have been rescinded.
(iii)
This certificate is not eligible to be purchased or held
by any credit union or credit union service organization thereof. The issuer
of this certificate may not recognize on its transfer books any transfer made
to a credit union or any credit union service organization thereof and will
not be obligated to make any payments of principal or interest on this certificate
if the owner of this certificate is a credit union or any credit union service
organization thereof."
(2)
Limitations as to term and prepayment.
(A)
No certificate of indebtedness issued by a credit union
pursuant to this section shall have an original period to maturity of less
than seven years. During the first six years that such a certificate is outstanding,
the total of all required sinking fund payments, other required prepayments,
and required reserve allocations with respect to the portion of such six years
as have elapsed shall at no time exceed the original principal amount or original
redemption price, thereof multiplied by a fraction, the numerator of which
is the number of years that have elapsed since the issuance of the certificate
and the denominator of which is the number of years covered by the original
period to maturity.
(B)
No voluntary prepayment of principal shall be made and
no payment of principal shall be accelerated without the approval of the commissioner
if the credit union's net worth ratio is below 6% or, if after giving effect
to such payment, the credit union's net worth ratio would fall below 6%.
(d)
Offering circular. The credit union shall submit the proposed
offering circular to the Department. The offering circular must state the
following in bold print: "These certificates have not been approved by the
Texas Credit Union Department nor has the Texas Credit Union Department approved
this offering circular."
(e)
Supervisory objection. Generally, the commissioner will
not issue a non-objection letter where:
(1)
The proposed issue fails to transfer risk away from the
National Credit Union Share Insurance Fund or other insuring organization
and onto the certificate holders.
(2)
Information submitted in connection with the application
or otherwise available to the Department indicates that the credit union will
not be able to service the proposed debt. Evaluation of the issuer's ability
to service debt should be prospective, based upon the issuer's business plan.
(3)
The ratio of subordinated debt included as equity capital
to the credit union's net worth requirements exceeds one-third, after giving
effect to the proposed issue.
(4)
The proposed deployment of the proceeds of the proposed
issue is contrary to the credit union's business plan, is unrealistic in its
assumptions, or is inconsistent with the principles of safety and soundness.
(5)
The credit union has failed to comply with the terms and
conditions imposed upon previous subordinated debt issuances, or has failed
to comply with any outstanding enforcement action, written agreement or any
other significant supervisory requirement.
(f)
Additional requirements. The commissioner may impose on
the credit union such requirements or conditions with regard to certificates
or the offering or issuance thereof as the commissioner may deem necessary
or desirable for the protection of purchasers, the credit union, the National
Credit Union Share Insurance Fund, or other insuring organization, as the
case may be.
(g)
Limitation on offering period. Following the date of the
issuance of a non-objection letter, the credit union shall have an offering
period of not more than one year in which to complete the sale of the certificates
of indebtedness issued pursuant to this section. The commissioner may in his
discretion extend such offering period if a written request showing good cause
for such extension is filed with the Department not later than 30 days before
the expiration of such offering period or any previous extension thereof.
(h)
Policies and Procedures. Before any offers or sales of
the certificates are made on the premises of the credit union or its credit
union service organization, the credit union shall submit to the Department
a set of polices and procedures for such sale of certificates that is satisfactory
to the Department.
(i)
Records. A credit union shall establish and maintain certificate
of indebtedness documentation practices and records that demonstrate the credit
union appropriately administers and monitors certificate of indebtedness-related
activities. The credit union's records should adequately evidence ownership,
balances, and all transactions involving each certificate. The credit union
may maintain records on certificate of indebtedness activities in any format
that is consistent with standard business practices.
(j)
Disclosures.
(1)
In connection with the purchase of a certificate of indebtedness
by a person from the issuing credit union or its credit union service organization,
the credit union and/or the credit union service organization must disclose
to the person that:
(A)
The certificate of indebtedness is not a share or deposit;
(B)
The certificate of indebtedness is not insured by the National
Credit Union Share Insurance Fund or any other insuring organization;
(C)
There is investment risk associated with the certificate
of indebtedness, including the possible loss of value; and
(D)
The credit union may not condition an extension of credit
on a person's purchase of a certificate of indebtedness.
(2)
The disclosures required by paragraph (1) above must be
provided orally and in writing before the completion of the sale of a certificate
of indebtedness. If the sale of a certificate of indebtedness is conducted
by telephone, the credit union may provide the written disclosure required
by paragraph (1) by mail within three business days beginning the first business
day after the sale, solicitation, or offer.
(3)
A credit union may provide the written disclosures required
by paragraph (1) through electronic media instead of on paper, if the person
affirmatively consents to receiving the disclosures electronically and if
the disclosures are provided in a format that the person may retain or obtain
later, for example, by printing or storing electronically (such as by downloading).
(4)
The disclosures provided shall be conspicuous and designed
to call attention to the nature and significance of the information provided.
(k)
Sales Activities. A credit union must, to the extent practicable:
(1)
Keep the area where the credit union conducts transactions
involving certificate of indebtedness physically segregated from areas where
shares and deposits are routinely accepted from members;
(2)
Identify the area where certificate of indebtedness activities
occur; and
(3)
Clearly delineate and distinguish those areas from the
areas where the credit union's share- and deposit-taking activities occur.
(l)
Referrals. Any person who accepts deposits from members
in an area where such transactions are routinely conducted in a credit union
may refer a member who seeks to purchase a certificate of indebtedness to
a qualified person who sells that product only if the person making the referral
receives no additional compensation for making the referral.
(m)
Reports. Within 30 days after completion of the sale of
the subordinated debt issued pursuant to this section, the credit union shall
transmit a written report to the Department stating the number of purchases,
the total dollar amount of certificates sold, and the amount of net proceeds
received by the credit union. The credit union's report shall clearly state
the amount of subordinated debt, net of all expenses that the credit union
intends to have counted as equity capital. In addition, the credit union,
shall submit to the Department, certification of compliance with all applicable
laws and regulations in connection with the offering, issuance, and sale of
the certificates.
(n)
Equity capital. When a certificate of indebtedness has
a remaining maturity of 5 years, the amount of the certificates that may be
considered equity capital shall be reduced by a minimum of 20% of the original
amount of the certificate per year. The equity capital shall be reduced by
a constant monthly amortization to ensure the recognition of subordinated
debt is fully amortized when the certificate matures or is prepaid.
(o)
Prohibited practices.
(1)
A credit union may not engage in any practice or use any
advertisement at any office of, or on behalf of, a credit union that could
mislead any person or otherwise cause a reasonable person to reach an erroneous
belief with respect to:
(A)
the fact that a certificate of indebtedness a credit union
sells or offers for sale is not insured by the National Credit Union Share
Insurance Fund or other insuring organization;
(B)
the fact that there is an investment risk, including the
potential that principal may be lost and that the certificate may decline
in value; or
(C)
the fact that the approval of an extension of credit to
a person by the credit union or credit union service organization may not
be conditioned on the purchase of a certificate of indebtedness from the credit
union or credit union service organization.
(2)
No credit union shall directly or indirectly:
(A)
employ any device, scheme or artifice to defraud,
(B)
make any untrue statement of a material fact or omit to
state a material fact necessary in order to make statements made, in light
of the circumstances under which they were made, not misleading, or
(C)
engage in any act, practice, or course of business which
operates as a fraud or deceit upon any person, in connection with the purchase
or sale of any certificate of indebtedness.
This agency hereby certifies that the proposal
has been reviewed by legal counsel and found to be within the agency's legal
authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308673
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §91.8000
The Credit Union Commission proposes a new §91.8000,
relating to discovery of confidential information to comply with recent legislation.
The new rule implements a new provision enacted in the 78th Session of
the Legislature that was contained within House Bill 1307. The provision added
a new §126.002 to the Texas Finance Code requiring credit unions to comply
with rules adopted by the Commission concerning discovery of confidential
information under subpoena or other legal process. The proposed new rule restricts
the release of confidential information to the portion directly relevant to
the legal dispute at issue and requires a protective order be issue by a court
before release of the confidential information.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed new rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed new rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be compliance with new legislation and increased
control over confidential information. There is no anticipated effect on small
businesses as a result of adopting the new rule. There is no economic cost
anticipated to credit unions for complying with the new rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The new rule is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code and under §126.002 of the Texas Finance Code which authorizes
the commission to adopt rules restricting the release of confidential information
to the portion directly relevant to the legal dispute at issue and requires
a protective order be issue by a court before release of the confidential
information.
The specific section affected by the proposed new rule is Texas Finance
Code, §126.002.
§91.8000.Discovery of Confidential Information.
(a)
General rule. A credit union, governmental agency, credit
union service organization, service provider, or insuring organization that
receives a subpoena or other form of discovery for the release of information
that is confidential under §126.002 of the Act shall promptly:
(1)
notify the department of the request;
(2)
provide the department with a copy of the discovery documentation
and, if requested by the department, a copy of the requested information;
and
(3)
move for a protective order, or its equivalent under applicable
rules of procedure. In addition, prior to the release of confidential information,
such credit union, governmental agency, credit union service organization,
service provider, or insuring organization must obtain a ruling on its motion
in accordance with this section. Confidential information may be released
only pursuant to a protective order, or its equivalent, in a form consistent
with that set out in this section and only if a court with jurisdiction has
found that:
(A)
the party seeking the information has a substantial need
for the information;
(B)
the information is directly relevant to the legal dispute
in issue; and
(C)
the party seeking the information is unable without undue
hardship to obtain its substantial equivalent by other means.
(b)
Discretionary filings by department. On receipt of notice
under subsection (a) of this section, the department may take action as may
be appropriate to protect confidential information. The department has standing
to intervene in a suit or administrative hearing for the purpose of filing
a motion for protective order and in camera inspection in accordance with
this section.
(c)
Motion for protective order, or equivalent, and in camera
inspection. The movant shall ask the court to enter an order in accordance
with this section regarding the release of confidential information. If necessary
to resolve a dispute regarding the confidential status or direct relevance
of any information sought to be released, the party seeking the order shall
move for an in camera inspection of the pertinent information. Until subject
to a protective order, or its equivalent, confidential information may not
be released, and, if necessary, the party seeking an order shall request the
court officer to deny discovery of such confidential information.
(d)
Protective order or equivalent. An order obtained pursuant
to the terms of this section must:
(1)
specifically bind each party to the litigation, including
one who becomes a party to the suit after the order is entered, each attorney
of record, and each person who becomes privy to the confidential information
as a result of its disclosure under the terms of the order;
(2)
describe in general terms the confidential information
to be produced;
(3)
state substantially the following in the body of the order:
(A)
absent court order to the contrary, only the court reporter
and attorneys of record in the cause may copy confidential information produced
under the order in whole or part;
(B)
the attorneys of record are custodians responsible for
all originals and copies of confidential information produced under the order
and must insure that disclosure is limited to those persons specified in the
order;
(C)
confidential information subject to the order and all information
derived therefrom may be used only for the purposes of the trial, appeal,
or other proceedings in the case in which it is produced;
(D)
confidential information to be filed or included in a filing
in the case must be filed with the clerk separately in a sealed envelope bearing
suitable identification, and is available only to the court and to those persons
authorized by the order to receive confidential information, and all originals
and copies made of such documents and records must be kept under seal and
disclosed only in accordance with the term of the protective order;
(E)
confidential information produced under the order may be
disclosed only to the following persons and only after counsel has explained
the terms of the order to the person who will receive the information and
provided that person with a copy of the order;
(i)
to a party and to an officer, employee, or representative
of a party, to a party's attorneys (including other members and associates
of the respective law firms and contract attorneys in connection with work
on the case) and, to the extent an attorney of record in good faith determines
disclosure is necessary or appropriate for the conduct of the litigation,
legal assistants, office clerks and secretaries working under the attorney's
supervision;
(ii)
to a witness or potential witness in the case;
(iii)
to an outside expert retained for consultation or for
testimony, provided the expert agrees to be bound by the terms of the order
and the party employing the expert agrees to be responsible for the compliance
by its expert with this confidentiality obligation; and
(iv)
to the court or to an appellate officer or body with jurisdiction
of an appeal in the case;
(F)
at the request of the department or a party, only the court,
the parties and their attorneys, and other persons the court reasonably determines
should be present may attend the live testimony of a witness or discussions
or oral arguments before the court that may include confidential information
or relate to such confidential information. The parties shall request the
court to instruct all persons present at such testimony, discussions, or arguments
that release of confidential information is strictly forbidden;
(G)
a transcript, including a deposition transcript, that may
include confidential information subject to non-disclosure is subject to the
order. The party requesting the testimony of a current or former department
officer, employee, or agent shall, at its expense, furnish the department
a copy of the transcript of the testimony once it has been transcribed.
(H)
Upon ultimate conclusion of the case by final judgment
and the expiration of time to appeal, or by settlement or otherwise, counsel
for each party shall return all copies of every document subject to the order
for which the counsel is custodian to the party that produced the confidential
information; and
(I)
Production of documents subject to the order does not waive
a claim of privilege or right to withhold the documents from a person not
subject to the order.
(4)
Paragraph (3)(A), (B) and (E) - (H) of this subsection
are subject to modification by the court for good cause before the conclusion
of the proceeding, upon notice and opportunity to appear to the department.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308663
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
Subchapter E. APPEALS OF ORDERS OF CONSERVATION
7 TAC §93.502
The Credit Union Commission proposes a new §93.502,
relating to retention of attorney to comply with recent legislation.
The new rule implements a new provision enacted in the 78th Session of
the Legislature that was contained within House Bill 1307. The provision amended §126.159
of the Texas Finance Code to allow a credit union that has been placed into
conservatorship to retain an attorney in contesting or satisfying the requirements
of the order of conservatorship. The proposed new rule establishes the criteria
that a credit union must follow in order for the Commissioner to authorize
the payment of reasonable fees and expenses for such attorney.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed new rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed new rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be compliance with new legislation and to ensure
that attorneys fees paid when a credit union is in conservatorship are reasonable.
There is no anticipated effect on small businesses as a result of adopting
the new rule. There is no economic cost anticipated to credit unions for complying
with the new rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The new rule is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code and under §126.159 of the Texas Finance Code which authorizes
the commissioner to authorize the payment of reasonable fees and expenses
of the attorneys as expenses of the conservatorship.
The specific section affected by the proposed new rule is Texas Finance
Code, §126.159.
§93.502.Retention of Attorney.
In the event a credit union retains an attorney or hires other persons
to assist the credit union in contesting or satisfying the requirements of
an order of conservation, the commissioner shall authorize the payment of
reasonable fees and expenses for such persons as expenses of the conservatorship.
In order for the commissioner to determine the reasonableness of the fees
and expenses, the credit union must submit a billing statement showing the
billable rate, the number of hours claimed, and a detailed description of
services performed and related expenses incurred. The credit union may also
submit copies of other bids received for the services, research substantiating
the reasonableness of the fees charged, or any other evidence the credit union
believes may support the reasonableness of the fees and expenses. Any fees
or expenses the commissioner deems unreasonable shall not be authorized for
payment.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308664
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
Subchapter A. GENERAL PROVISIONS
7 TAC §97.107
The Credit Union Commission proposes a new §97.107,
relating to related entities, to comply with recent legislation.
The new rule implements a new provision enacted in the 78th Session of
the Legislature that was contained within HB 1307. The provision added a new
section 15.4032 to the Texas Finance Code allowing the Department to examine
certain credit union related entities. The proposed new rule establishes the
criteria that will be used in the examination of these related entities.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be compliance with new legislation and
greater safety and soundness of credit union related entities and the credit
unions who invest in them. There is no anticipated effect on small businesses
as a result of adopting the amended rule. There is no economic cost anticipated
to credit unions for complying with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The amendment is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code and under §15.4032 of the Texas Finance Code which authorizes
the commission to adopt rules regarding the examination of credit union related
entities.
The specific section affected by the proposed amendment is Texas Finance
Code, §15.4032.
§97.107.Related Entities.
(a)
Definition. For the purposes of this section, a related
entity is defined as:
(1)
a credit union service organization in which a credit union
has a material interest by contracting with, lending to or investing in the
organization;
(2)
an organization engaged primarily in the business of managing
a credit union; and
(3)
third-party contractors providing electronic data processing,
electronic fund transfers, or other member services to or on behalf of a credit
union.
(b)
General Supervision. A credit union should perform a thorough
analytical assessment to identify, measure, monitor, and establish controls
to manage the risks associated with related entities and avoid excessive risk-taking
that may threaten the safety and soundness of a credit union. The department
may review the risks associated with any related entity and its activities
together with other credit union risks using its supervision-by-risk framework.
The department shall assess the effectiveness of a credit union's oversight
program of related entities, including its strategic planning, third-party
selection process, and ongoing monitoring.
(c)
Examination. A credit union's use of related entities to
achieve its strategic goals does not diminish the responsibility of the department
to ensure that the activity is conducted in a safe and sound manner and in
compliance with applicable law. Although in most situations, these activities
should be conducted in the same manner that would be expected if the credit
union were conducting the activities directly, the department shall consider
the following factors in determining whether to exam related entities:
(1)
the high risk or unusual nature of the activities conducted
by the related entity for the credit union;
(2)
the significance of the activities conducted by the related
entity for the credit union to the credit union's operations and income; and
(3)
the extent to which the credit union has sufficient systems,
controls, and personnel to adequately monitor, measure, and control risks
arising from activities conducted by the related entity. The department may
examine a related entity, as the commissioner deems necessary to ensure that
a credit union is not assuming excessive risk.
(d)
Examination Fee. The related entity shall pay a supplemental
examination fee as prescribed in §97.113(e) of this title (relating to
Supplemental Examinations). A credit union may elect to pay the fee on behalf
of the related entity. The supplemental examination fee for a related entity
may be waived or reduced if the commissioner determines it is appropriate.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308665
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §97.207
The Credit Union Commission proposes §97.207, relating
to authority to contract, to comply with recent legislation.
The new rule implements a new provision enacted in the 78th Session of
the Legislature that was contained within HB 1307. The provision added a new
section 15.414 to the Texas Finance Code authorizing the Commissioner to negotiate,
contract or enter into agreements for professional or personal services to
carry out the powers and duties of the Department. In addition, the Commission
by rule is required to adopt policies and procedures consistent with applicable
state procurement practices for soliciting and awarding contracts under this
section. The proposed new rule establishes the applicable procedures.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be compliance with new legislation and
better resources available for the operation of the department. There is no
anticipated effect on small businesses as a result of adopting the amended
rule. There is no economic cost anticipated to credit unions for complying
with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The amendment is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code and under §15.414 of the Texas Finance Code which authorizes
the commission to adopt rules regarding the solicitation and award of contracts
for professional or personal services.
The specific section affected by the proposed amendment is Texas Finance
Code, §15.414.
§97.207.Contracts for Professional or Personal Service.
(a)
In connection with the authority granted to the commissioner
to negotiate, contract or enter into an agreement for professional or personal
services under §15.414, Texas Finance Code, the Department hereby incorporates
by reference the procurement rules of the Texas Building and Procurement Commission,
1 TAC Chapter 113A, or any successor rules, regarding soliciting and awarding
contracts. The Department shall comply, to the extent applicable, with the
requirements of these rules when contracting for professional or personal
services that are paid for with State appropriated money or paid by credit
unions pursuant to 7 TAC §97.113(l).
(b)
Any professional or personal service contracts between
the Department and entities that receive funds from the State of Texas shall
contain the following language regarding the authority of the State Auditor's
Office to conduct an audit or investigation in connection with those funds:
"Contractor understands that acceptance of funds under this contract acts
as acceptance of the authority of the State Auditor's Office, or any successor
agency, to conduct an audit or investigation in connection with those funds.
Contractor further agrees to cooperate fully with the State Auditor's office
or its successor in the conduct of the audit or investigation, including providing
all records requested. Contractor will ensure that this clause concerning
the authority to audit funds received indirectly by subcontractors through
Contractor and the requirements to cooperate is include in any subcontract
it awards."
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308666
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
7 TAC §97.300
The Credit Union Commission proposes a new §97.300,
relating to gifts of money or property, to comply with recent legislation.
The new rule implements a new provision enacted in the 78th Session of
the Legislature that was contained within HB 1307. The provision added a new
section 15.413 to the Texas Finance Code authorizing the Department, subject
to the Commission's approval, to accept money or property by gift, bequest,
devise, or otherwise for any department purpose. The proposed new rule establishes
the pertinent criteria that a person must follow before the Commission will
consider approval of the gift.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be compliance with new legislation and
better resources available for the operation of the department. There is no
anticipated effect on small businesses as a result of adopting the amended
rule. There is no economic cost anticipated to credit unions for complying
with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The amendment is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code and under §15.413 of the Texas Finance Code which authorizes
the Commission to accept gifts of money or property.
The specific section affected by the proposed amendment is Texas Finance
Code, §15.413.
§97.300.Gifts of Money or Property.
(a)
The department may only accept money or property by gift,
bequest, devise, or otherwise ("Donation") from an organization described
in Section 501(c)(3), Internal Revenue Code of 1986, for the purposes of funding
or performing any authorized activity ("Donor").
(b)
All Donations must be accepted in an open meeting by a
majority of the commission members present and reported in the minutes of
the meeting setting forth the name of the Donor and the purpose of the Donation.
Before accepting a Donation, the commission may require the Donor to provide
information that the commission deems reasonable and necessary to ensure itself
that the Donation is not being conveyed to directly or indirectly influence
an official act of the department or the commission.
(c)
The department may not solicit money or property from any
person or organization to settle an administrative action or to keep the Department
from taking formal enforcement action.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 18, 2003.
TRD-200308667
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: February 1, 2004
For further information, please call: (512) 837-9236
Chapter 153.
HOME EQUITY LENDING
Since
] contested
case procedures are closely modeled upon those used in a court of law, the
agency strongly urges but does not require parties to employ attorneys
for representation. Only licensed attorneys may file pleadings, make written
or oral arguments or objections to evidence, or examine witnesses in agency
hearings, except that:
to represent them. A private individual may appear pro se. An officer, partner,
or full time employee may represent a corporation, partnership, association,
or firm in a hearing before the administrative law judge even if that person
is not a licensed attorney, if that person observes proper decorum and the
instructions of the administrative law judge. Attorneys who are licensed in
other states but not in Texas may represent a client in a contested case hearing
with the permission of the administrative law judge
].
Notwithstanding
a requirement of the Texas Rules of Civil Procedure to the contrary, a party
may not file a discovery request, a response to a discovery request, or a
discovery deposition with the administrative law judge unless the party introduces
such as evidence or unless the administrative law judge requests that the
party do so
].
Part 2.
TEXAS DEPARTMENT OF BANKING
Chapter 26.
PERPETUAL CARE CEMETERIES
relating to the perpetual care fund or to discharge of the corporation's perpetual
care responsibilities that you receive from a consumer at your cemetery location
]. The term does not include
an
oral
complaint
[
complaints
].
an individual who obtains or has obtained a product or service
from you that is to be used primarily for personal, family, or household purposes.
]
Finance Code
].
Part 6.
CREDIT UNION DEPARTMENT
1986
] or as subsequently revised or amended, constitute the [
standard
form of
] bylaws which shall be used by credit union incorporators.
Subchapter D. POWERS OF CREDIT UNIONS
Subchapter E. DIRECTION OF AFFAIRS
semi annual
] report to the department as prescribed by the Act, the commissioner
may require from all credit unions or from selected categories of credit unions
other financial and statistical reports relating to financial condition and
accounting practices.
Subchapter G. LENDING POWERS
(3)
] Loan(s) otherwise meeting the
definition of a member business loan made to a member or associated member
that, in the aggregate, is $50,000 or less; or
(4)
] A loan where a federal or state
agency or one of its political subdivisions fully insures repayment, or fully
guarantees repayment, or provides an advance commitment to purchase in full.
outstanding member business loans (including any unfounded commitments)
] is the lesser of 1.75 times the credit union's net worth or 12.25%
of the credit union's total assets. Loans that are exempt from the definition
of member business loans are not counted for the purpose of the aggregate
loan limit.
(c)
] The aggregate amount of
net member business loan balances
[
outstanding member business
loans to
] any one member or group of associated members shall not be
more than 15% of the credit union's net worth (less the Allowance for Loan
Losses account) or $100,000.00, whichever is higher. If any portion of a member
business loan is secured by shares in the credit union or deposits in another
financial institution, or is fully or partially insured or guaranteed by,
or subject to an advance commitment to purchase by, any agency of the Federal
government or of a state or any of its political subdivisions, such portion
shall not be calculated in determining the 15% limit.
(d)
] All member business loans must
be secured by collateral in accordance with this section, except the following:
(B)
] the credit union has a net
worth of at least seven percent.
(e)
] The maximum loan-to-value (LTV)
ratio for a member business loan may not exceed eighty percent
,
[
.
]
except when
[
Notwithstanding the foregoing, if a
loan is secured by collateral on which the credit union will have a first
lien, the LTV ratio may exceed eighty percent if the loans is
]:
Covered
] through
acquisition of private mortgage or equivalent type insurance provided by an
insurer acceptable to the credit union; or
(2)
] Insured or guaranteed, or subject
to advance commitment to purchase, by any federal or state agency or any political
subdivision of this State. In no case, however, may the LTV ratio for a member
business loan secured by a first
mortgage
lien exceed ninety-five
percent
; or
(f)
] A credit union that engages
in this type of lending shall adopt specific member business loan policies
and review them at least annually. The policies, at a minimum, shall address
all of the following areas:
outstanding member business loans
] relative to the credit
union's net worth.
(g)
] Construction and development
of commercial or residential property are subject to the following additional
requirements:
(h)
] For the purposes of this section,
the following words and terms, when used in this section, shall have the following
meanings, unless the context clearly indicates otherwise.
(2)
] Net Worth--means retained earnings
as defined under Section 702.2 of the National Credit Union Administration's
Rules and Regulations (12 CFR, Chapter VII, Part 702).
the term immediate family member includes
the spouse of an individual, the individual's minor children, and any of the
individual's children (including adults) residing in the individual's home.
]
executive staff
],
and immediate family members of all such individuals shall not exceed 20%
of the credit union's total assets. The requirements described in this subsection
shall apply unless waived in writing by the commissioner for good cause shown.
executive
staff
], and immediate family members of such individuals. Each report
must ordinarily be retained at the credit union for a period of three years
and shall not be filed with the Department unless specifically requested.
The report required by this section shall include the following information:
Subchapter P. OTHER FORMS OF EQUITY CAPITAL
Subchapter Q. ACCESS TO CONFIDENTIAL INFORMATION
Chapter 93.
ADMINISTRATIVE PROCEEDINGS
Chapter 97.
COMMISSION POLICIES AND ADMINISTRATIVE RULES
Subchapter C. DEPARTMENT OPERATIONS
Subchapter D. GIFTS AND BEQUESTS
Part 8.
JOINT FINANCIAL REGULATORY AGENCIES