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NOTE: For nomenclature changes in this chapter, see 36 FR 18637, Sept. 18, 1971.

Part 700 701

Page 894

702 703 704 706 707 708 709 710 715 720

895 921 923 923 924 925 926 929 931 934

Definitions ...
Organization and operation of Federal credit

unions ......
Reserves
Investments and deposits.........
Corporate central Federal credit unions.
Conversion from Federal to State credit unions
Conversion from State to Federal credit unions
Mergers of credit unions
Division of assets, liabilities, and capital.........
Voluntary liquidation of Federal credit unions ....
Involuntary liquidation of Federal credit unions ....
Description of office, disclosure of official rec-

ords—availability of information, promulgation

of regulations .......
Incidental powers .........
Advisory committee procedures....
Employee responsibility and conduct
Advertisement of insured status.......
Requirements for insurance .....
Clarification and definition of account insurance

coverage ...
Rebate procedures for Federally insured credit

unions .......
Rules of practice and procedure
Minimum security devices and procedures
Records preservation program..............
Tort claims against the government
Flood insurance

721 722 735 740 741 745

943 959 963 966 968 971

974

746

747

748 749 750 760

978 979 981 1008 1011 1014 PART 700--DEFINITIONS

and loan associations, and credit

unions. 8 700.1 Definitions.

(3) Assets which are insured by, fully As used in this chapter:

guaranteed as to principal and interest

by, or due from the U.S. Government, (a) “Act” means the Federal Credit Union Act (73 Stat. 628, 84 Stat. 944,

its agencies, the Federal National 12 U.S.C. 1751-1790).

Mortgage Association, or the Govern(b) “Administration" means the Na

ment National Mortgage Association.

(4) Loans to other credit unions. tional Credit Union Administration.

(5) Loans to students insured under (c) "Administrator" means the Ad

the provisions of title IV, part B of the ministrator of the National Credit

Higher Education Act of 1965 (20 Union Administration. (d) “Credit Union” means a credit

U.S.C. 1071 et seq.) or similar State in.

surance programs. union chartered under the Federal

(6) Loans insured under title I of the Credit Union Act or, as the context

National Housing Act (12 U.S.C. 1703) permits, under the laws of any State. (e) “Regional Director” means the

by the Federal Housing Administra

tion. representative of the Administration in the designated geographical area in

(7) Shares or deposits in central

credit unions. A central credit union is which the office of the Federal credit

defined as a credit union whose memunion is located. (f) “Regional Office" means the

bership primarily consists of:

(i) Other credit unions organized office of the Administration located in under State or Federal law, the designated geographical areas in

(ii) Officials, committee members, which the office of the Federal credit union is located.

and employees of any credit union or

ganized under State or Federal law, or (g) "State” means a State of the

(iii) Any combination of the categoUnited States, the District of Colum

ries described in paragraphs (1)(7)(i) bia, any of the several Territories and and (ii) of this section. possessions of the United States, the

(8) Common trust investments which Panama Canal Zone, and the Com- deal in investments authorized by the monwealth of Puerto Rico.

Federal Credit Union Act. (h) Pursuant to section 101(4) of the (9) Prepaid expenses. Federal Credit Union Act, the term (10) Accrued interest on nonrisk in"low income members" shall include vestments. (1) those members whose annual (11) Furniture and equipment. income falls at or below the lower (12) Land and buildings. level Standard of Living classification (13) Loans fully secured by a pledge as established by the Bureau of Labor. of shares in the lending Federal credit Statistics, U.S. Department of Labor, union, equal to and maintained to at (2) those members who are residents

least the amount of the loan outstandof a public housing project who quali

ing. fy for such residency because of low (14) Loans which are purchased income, and (3) members who qualify

from liquidating credit unions and as recipients in a community action guaranteed by the National Credit program.

Union Administration. (i) As used in section 101(4) of the (k)(1) Insolvency. A credit union will Federal Credit Union Act, the term be determined to be insolvent when “predominantly” is defined as a simple the total amount of its shares exceeds majority.

the present cash value of its assets (j) For the purpose of establishing after providing for liabilities unless: the reserves required by section 116 of (i) It is determined by the Administhe Federal Credit Union Act, all trator that the facts that caused the assets except the following shall be deficient share-asset ratio no longer considered risk assets:

exist; and (1) Cash on hand.

(ii) The likelihood of further depre(2) Deposits and/or shares in Feder- ciation of the share-asset ratio is not ally or State insured banks, savings probable; and

(iii) The return of the share-asset ratio to its normal limits within a reasonable time for the credit union concerned is probable; and

(iv) The probability of a further potential loss to the insurance fund is negligible.

(2) For purposes of this section, the following definitions are used:

(i) “Cash value of assets”. Recorded value will be considered the cash value

of any asset account providing acceptI ed accounting principles and practices

are followed and the provisions of law, regulation, and bylaws are met.

(i) “Liabilities”. Recorded liabilities which are due and payable, excluding shares of members and non-members, are considered liabilities. (Sec. 16, 48 Stat. 1221, as amended, sec. 120, 73 Stat. 635; 12 U.S.C. 1766) [36 FR 23794, Dec. 15, 1971; 37 FR 329, Jan. 11, 1972, as amended at 37 FR 10342, May 20, 1972; 39 FR 45256, Dec. 31, 1974; 40 FR 60069, Dec. 31, 1975)

Sec.
701.21-2 Amortization and payment of

loans to members.
701.21-3 Lines of credit to members.
701.21-4 Loans to officials.
701.21-5 Insured and guaranteed loans.
701.22 Selling checks and money orders.
701.23 Cashing checks and money orders.
701.24 Refund of interest.
701.25 (Reserved)
701.26 Credit union service center.
701.27-1 Purchase and sale of accounting

services. 701.27-2 Participation in Accounting Sery

ice Center. 701.28 Joint operations and activities. 701.29 Purchase of notes of a liquidating

credit union. 701.30 Safe deposit box service. 701.31 Nondiscrimination requirements. 701.32 Payments on shares by public units. 701.33 Compensation of officials. 701.34 Share drafts. 701.35 Share Accounts and Share Certifi.

cate Accounts. AUTHORITY: Sec. 21, 73 Stat. 635; 12 U.S.C. 1766, unless otherwise noted.

SOURCE: 25 FR 5286, June 14, 1960; 36 FR 18637, Sept. 18, 1971, unless otherwise noted. Redesignated at 35 FR 17398, Nov, 13, 1970.

PART 701-ORGANIZATION AND

OPERATION OF FEDERAL CREDIT
UNIONS

Sec.
701.1 Organization of Federal credit

unions.
701.2 Incorporation by reference.
701.3 Standard form of bylaws.
701.4 Amendment of bylaws and charters.
701.5 Other applications.
701.6 Fee for supervision.
701.7 Fee for examination.
701.8 Fee for examination of Federal credit

unions in liquidation. 701.9 Loans by Federal credit unions to

other credit unions. 703.10 Establishment of a cash fund. 701.11 Election report. 701.12 Supervisory committee audits. 701.13 Financial and statistical and other

reports. 701.14 Instructions for officials. 701.15 Other publications. 701.16 Statements of policy and interpreta

tions. 701.17 List of Federal credit unions. 701.18 Petitions. 701.19 Retirement benefits for employees

of Federal credit unions. 701.20 Surety bond coverage for Federal

credit unions. 701.21 [Reserved) 701.21-1 Lending policies: Loans and lines

of credit to members.

$ 701.1 Organization of Federal credit

unions. (a) Persons desiring to form a Federal credit union shall, in conjunction with the preparation of a proposed Or. ganization Certificate in accordance with paragraph (b) of this section, accomplish the following:

(1) Arrange a meeting and sufficiently advertise the meeting so as to afford all persons in the field of membership an opportunity to attend;

(2) Provide that an investigator shall be present at the meeting; it is not necessary that the investigator be an employee of the National Credit Union Administration;

(3) Prior to the convening of the meeting, accomplish the following:

(i) Selection of at least seven but not more than 10 persons who will be the subscribers and who will be from and representative of the group to be served by the credit union;

(ii) Selection of at least five qualified persons who will agree to serve on the board of directors, three qualified persons who will agree to serve on the credit committee, and three qualified persons who will agree to serve on the

ments for the expenses of the Farm Credit Administration.

8 618.8240 Quarters and facilities for the

Farm Credit Administration. With the concurrence of two-thirds of the district boards, the Farm Credit Administration may assess the banks such advances of funds as may be required to lease property in the District of Columbia or elsewhere for quarters of the Farm Credit Administration and for related purposes as provided by the Act.

the banks, and their spouses where ap. iters and st propriate, shall be allowed in accord character, C ance with travel regulations adopted xg of borrow by the district board. Similar travel sumendations regulations shall be prescribed for di- d reports rectors, officials and employees of as- anvestigators, sociations by the supervising bank under policy established by the dis- quirements trict board or shall be developed and is section are adopted by the board of directors of inceptions. the associations under district board zuivers and ot policy and approved by the bank. The tives of the F regulations shall contain a statement san and the b of policy on the use of official cars for free access private use and will take into consider-mody and files. ation regulations issued by the Inter- wüted represe nal Revenue Service which are appli- ed in 8617.7 cable to the employer.

min of officia [41 FR 33547, Aug. 10, 1976)

a case on whic

the particul Subpart F-Releasing Information

od & certifica § 618.8300 General regulation.

Except as necessary in performing vidential use official duties or as authorized in the shie

, be given following paragraphs, no director or xetinent to th employee of a bank, association, or agency thereof shall disclose informa chairman of tion of a type not ordinarily contained in published reports or press releases regarding any such banks or associations or their borrowers or members.

8 618.8250 Purchases and sales of personal

property. Personal property shall be bought and sold by the banks and associations in accordance with policies and practices adopted by the district board. In order to avoid grounds for allegations of favoritism or fraud a bank or association shall not sell surplus property above a stated value established by the board to an employee except through open competitive bidding.

miten request

Tein is pertinen tin of the case

was of individua

as and the pr

37 supply stati

mal informatior

borrowers, a response to katment or ind Government r responsible p to the underst man will not be

8 618.8260 Purchase of automobiles

through General Services Administra.

tion. (a) Banks may purchase automobiles through the facilities of the General Services Administration by placing orders with the Farm Credit Administration. A purchase order will be issued to the General Services Administration showing in detail the exact specifications shown on the bank's order. The low bid for all orders submitted shall be accepted by the banks provided that the low bid is awarded according to the exact specifications outlined in the purchase order. (b)

No automobile purchased through the General Services Administration shall be disposed of before 2 years after delivery to the bank unless it has been driven at least 50,000 miles. Exceptions to this general rule will be made only if an automobile has been wrecked or damaged and is determined by the bank in writing submitted to the Farm Credit Administration to be beyond economical repair. 8 618.8270 Travel.

Travel and subsistence expenses of directors, officials and employees of

$ 618.8310 Lists of borrowers.

Federal intermediate credit banks and production credit associations may issue lists of borrowers for the information of buyers, warehousemen, and others who deal in produce or livestock of the kind that secures such loans. Otherwise lists of borrowers shall not be released by any bank and association, unless such release is approved by the chief executive officer of the bank.

hormation cong The given for by Farm Cred sation of the the collection spersonal info a transactions kerrower, such kemus, and pe kuiven by & ban

§ 618.8320 Data regarding borrowers and

loan applicants. (a) Except as provided in paragraph (b) of this section, the directors, officers, and employees of every bank and association shall hold in strict confidence all information regarding the character, credit standing, and property of borrowers and applicants for loans. They shall not exhibit or quote the following documents: loan applications; supplementary statements by

defidential us them in conter

of credit. hellunt informat etter may be a consents ther

litigation bety sueressor in association, A may be intr

1.1.51

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