Part 6.
CREDIT UNION DEPARTMENT
Chapter 95.
SHARE AND DEPOSITOR INSURANCE PROTECTION
Subchapter A. INSURANCE REQUIREMENTS
7 TAC §95.100
The Credit Union Commission adopts the repeal of existing
rule §95.100 concerning account insurance. The proposed repeal was published
in the November 3, 2006, issue of the
Texas Register
(31 TexReg 8951).
The adopted repealed rule is replaced by new §95.100 and §95.101
which provide definitions for the relevant terms and specify the requirement
that credit unions must obtain share and deposit insurance protection for
its members. The requirement that a credit union maintain account insurance
has been moved to new §95.101.
The rule is repealed as a result of the Credit Union Department’s
general rule review.
A public hearing on the proposed repeal was held at the Department offices
on Friday, January 19, 2007. No oral or written comments were received.
The repeal is adopted 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 §15.410, which requires credit
unions to maintain share and deposit insurance protection for its members
and depositors.
The specific section affected by the repeal is Texas Finance Code, §15.410.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 15, 2007.
TRD-200700498
Harold E. Feeney
Commissioner
Credit Union Department
Effective date: March 7, 2007
Proposal publication date: November 3, 2006
For further information, please call: (512) 837-9236
7 TAC §§95.100 - 95.109
The Credit Union Commission adopts new §§95.100
- 95.109, concerning insurance requirements under Subchapter A, with no changes
to the text published in the November 3, 2006, issue of the
Texas Register
(31 TexReg 8951). The adopted new rules update and replace
the old §95.100 concerning account insurance.
Section 95.100 provides definitions for the relevant terms found in the
various sections of this subchapter.
Section 95.101, concerning share and depositor insurance protection, incorporates
and expands on the requirements of old §95.100 that a credit union maintain
share and deposit insurance. The adopted new rule specifies the requirement
that credit unions must obtain share and deposit insurance for the protection
of its members and indicates that the insurance protection may be obtained
from NCUA or from an insuring organization approved by the Credit Union Department
(Department).
Section 95.102 concerns the qualifications for an insuring organization.
The adopted new rule prescribes requirements that an organization must meet
to provide share and deposit insurance protection for state-chartered credit
unions. The rule adoption provides that the insuring organization must be
in good standing in its state of domicile, that it receive regular examinations
from its state of domicile, and that it have adequate capital for its prospective
business. The adopted rule also sets out departmental requirements and fees.
Section 95.103 describes the powers and duties granted to an approved insuring
organization in carrying out its general purposes as a provider of share and
deposit insurance protection.
Section 95.104 stipulates that an insuring organization must notify the
Department when it receives an application for participation by a credit union
and when a credit union terminates participation in the insuring organization's
program.
Section 95.105 concerns reports filed by an insuring organization. The
adopted rule specifies that an insuring organization file with the Commissioner
annually audited financial statements, as well as periodic reports on the
capital adequacy of the insuring organization.
Section 95.106 concerns the amount of insurance protection a credit union
must maintain. The new rule adoption provides that a participating credit
union must maintain insurance for its share and deposit accounts in an amount
that is not less than the insurance coverage it would have under NCUSIF or
its successor. The adopted rule also sets out the conditions for a credit
union to issue membership shares that are not guaranteed and are subordinate
to all other claims.
Section 95.107, concerning the sharing of confidential information, allows
the Department, with the consent of the participating credit union, to share
examinations and other records with an insuring organization to allow the
insuring organization to assess the financial condition of the participating
credit union.
Section 95.108, concerning examinations, provides that the Department may
conduct examinations and investigations of an insuring organization, either
within or outside the state. The rule adoption also provides that the Department
shall perform a regular examination of each insuring organization.
Section 95.109 concerns fees and charges. The new rule adoption provides
that the insuring organization pay the costs of an examination and permits
the Department to engage professionals to perform examinations or investigations
at the expense of the insuring organization.
The new rules are adopted as a result of the Department's general rule
review.
A public hearing on the proposed new rules was held at the Department offices
on Friday, January 19, 2007. No oral comments were received.
Written comments in support of the new rules were received from Kelli Larsen
of Firstmark Credit Union. The commenter stated that the provision for private
share insurance is in the best interest of credit unions. The commenter requested
clarification on §95.100(d), stating that the definition appeared to
limit the insuring organization to providing aid and financial assistance
only to credit unions that are in the process of liquidation or are incurring
financial difficulty. The Department responds that the definition correctly
describes the function of the insuring organization as the organization would
not provide any aid until a credit union is in financial difficulty or in
liquidation.
Written comments from the Texas Department of Insurance generally supported
the rules but suggested that §95.102 be rewritten to require that the
insuring organization be authorized to write share insurance by the Texas
Department of Insurance. The Texas Credit Union Department declines to make
the suggested amendment. The Texas Credit Union Department does not consider
share insurance an insurance product nor is it regulated as insurance in any
of the nine states with a similar share insurance program. Additionally, the
Internal Revenue Service has ruled that share insurance is not insurance and
places insuring organizations under §501(c)(6) of the Internal Revenue
Code.
The Department of Insurance also noted that the rules do not address any
enforcement action the Texas Credit Union Department might take if the insuring
organization becomes financially unsound or engages in wrongdoing. This comment
is beyond the scope of these new rules but the concerns of the Department
of Insurance have been addressed in proposed new §95.110.
The new rules are adopted 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, §15.410, which requires credit
unions to provide share and deposit insurance protection for credit union
members and depositors.
The specific section affected by the adopted new rules is Texas Finance
Code, §15.410.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 15, 2007.
TRD-200700497
Harold E. Feeney
Commissioner
Credit Union Department
Effective date: March 7, 2007
Proposal publication date: November 3, 2006
For further information, please call: (512) 837-9236
7 TAC §95.200
The Credit Union Commission adopts amendments to §95.200
concerning notice of taking possession with no changes to the text published
in the November 10, 2006, issue of the
Texas Register
(31 TexReg 9103). The adopted amendments add a requirement that the
Credit Union Department (Department) notify the NCUA or the insuring organization
when it takes possession of the property and assets of a credit union. The
adopted amendments also provide that the NCUA or the insuring organization
is subrogated to all rights of the member up to the amount paid by the NCUA
or the insuring organization to the member.
The amended rules are adopted as a result of the Department's general rule
review.
A public hearing on the proposed amended rules was held at the Department
offices on Friday, January 19, 2007. No oral comments were received.
Written comments in support of the amendments were received from Kelli
Larsen of Firstmark Credit Union. The commenter stated that it supported the
Department's regulation of share insurance to guarantee the safety and soundness
of credit unions and to protect member deposits.
The amendments are adopted 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, §15.410, which requires a
credit union to maintain share and deposit insurance protection for its members
and depositors.
The specific section affected by the amended rule is Texas Finance Code, §15.410.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 15, 2007.
TRD-200700499
Harold E. Feeney
Commissioner
Credit Union Department
Effective date: March 7, 2007
Proposal publication date: November 10, 2006
For further information, please call: (512) 837-9236
7 TAC §95.205
The Credit Union Commission adopts new §95.205 concerning
the liability of the state for any deficiency, without changes to the text
published in the November 10, 2006, issue of the
Texas Register
(31 TexReg 9103). The new rule clarifies that the state
is not liable for the payment of any funds to a credit union by reason of
any acts or omissions of the NCUA or an insuring organization. The rule further
provides that the state is not liable for any deficiency of any credit union
in the event the NCUA or insuring organization is unable to pay such deficiency.
The new rule is adopted as a result of the Department's general rule review.
A public hearing on the proposed new rule was held at the Department offices
on Friday, January 19, 2007. No oral comments were received.
Written comments in support of the new rule were received from Kelli Larsen
with Firstmark Credit Union. The commenter stated that the proposed new and
amended rules appeared to accomplish the task of protecting member deposits.
The new rule is adopted 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 §15.410, which requires a credit
union to maintain share and deposit insurance protection for its members and
depositors.
The specific section affected by the new rule is Texas Finance Code, §15.410.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 15, 2007.
TRD-200700501
Harold E. Feeney
Commissioner
Credit Union Department
Effective date: March 7, 2007
Proposal publication date: November 10, 2006
For further information, please call: (512) 837-9236
7 TAC §§95.300 - 95.302, 95.304, 95.305
The Credit Union Commission adopts amendments to §§95.300
- 95.302, 95.304, and 95.305 of Subchapter C, Guaranty Credit Union, without
changes to the text published in the November 10, 2006, issue of the
The amendments to §95.300, concerning the establishment of a share
and deposit guaranty credit union, make it clear that prior to commencing
business in this state a guaranty credit union must file a written application
with the commissioner. The amendments also change the term chartering to incorporation.
Section 95.301, concerning the authority of a guaranty credit union, also
is amended to change the language from charter to certificate of incorporation.
Section 95.302, concerning powers of a guaranty credit union, is amended
to change the language from member credit union to participating credit union
to avoid confusion with a natural person credit union.
Section 95.304, concerning capital contributions, membership investment
shares, and termination, is amended to add requirements for a guarantee fund
maintained by a guaranty credit union and to further require each participating
credit union to maintain a membership investment share with a guaranty credit
union. The amendment defines what may be included in the guaranty fund. In
addition the term member credit union is changed to participating credit union
for consistency and clarification.
The amendment to §95.305, concerning the financial statements, accounting
procedures, and reports for a guaranty credit union, changes the requirement
for an actuarial study of the capital adequacy of the credit union from annually
to at least once every three years and aligns it with the equivalent requirement
for insuring organizations in Subchapter A.
The amendments are adopted as a result of the Department's general rule
review.
A public hearing on the proposed new rules was held at the Department offices
on Friday, January 19, 2007. No oral comments were received.
Written comments supporting the amendments were received from Kelli Larsen
of Firstmark Credit Union. The commenter supported the regulation of share
insurance to guarantee the safety and soundness of credit unions and to protect
member deposits.
The amended rules are adopted 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 §15.410, which requires
a credit union to maintain share and deposit insurance protection for its
members and depositors.
The specific section affected by the amended rules is Texas Finance Code, §15.410.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 15, 2007.
TRD-200700502
Harold E. Feeney
Commissioner
Credit Union Department
Effective date: March 7, 2007
Proposal publication date: November 10, 2006
For further information, please call: (512) 837-9236
7 TAC §95.306
The Credit Union Commission adopts without change the repeal
of §95.306 concerning requirements of a member credit union. The proposed
repeal was published in the November 10, 2006, issue of the
Texas Register
(31 TexReg 9106). The repealed rule is being moved
to a new Subchapter D, Disclosure for Non-Federally Insured Credit Unions,
and rewritten to give credit unions guidance as to the contents and locations
of the notices of the insurance status of their accounts.
The rule is repealed as a result of the Department's general rule review.
A public hearing on the proposed repeal was held at the Department offices
on Friday, January 19, 2007. No oral comments were received.
Written comments on the proposed repeal were received from Kelli Larsen
with Firstmark Credit Union. The commenter generally supported the rules regarding
private share insurance.
The repeal is adopted 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 §15.410, which requires credit
unions to maintain share and deposit insurance protection for credit union
members and depositors.
The specific section affected by the repeal is Texas Finance Code, §15.410.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 15, 2007.
TRD-200700505
Harold E. Feeney
Commissioner
Credit Union Department
Effective date: March 7, 2007
Proposal publication date: November 10, 2006
For further information, please call: (512) 837-9236
Subchapter B. LIQUIDATING AGENTS
Subchapter C. GUARANTY CREDIT UNION