WSR 14-04-127
(Division of Credit Unions)
[Filed February 5, 2014, 9:39 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 13-22-084.
Title of Rule and Other Identifying Information: Credit Union Act, chapter 31.12 RCW. Propose and adopt rules to implement chapter 34, Laws of 2013 (SB 5302) regarding frequency of board meetings. Chapter 208-400 WAC was created under Title 208 WAC.
Hearing Location(s): Department of Financial Institutions (DFI), 150 Israel Road S.W., Olympia, WA 98501, on March 20, 2014, at 2:00 p.m. - 4:00 p.m.
Date of Intended Adoption: April 8, 2014.
Submit Written Comments to: Linda Jekel, 150 Israel Road S.W., P.O. Box 41200, Olympia, WA 98504-1200, e-mail, fax (877) 330-6870, by Friday, March 28, 2014.
Assistance for Persons with Disabilities: Contact Linda Jekel by Friday, March 28, 2014, TTY (360) 664-8126 or (360) 902-8778.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: DFI wants to adopt rules to implement SB 5302 (chapter 34, Laws of 2013), addressing credit union corporate governance. These new rules will address frequency of board meetings.
Reasons Supporting Proposal: Specific information provided in the rules is necessary to guide the regulated industry in complying with the laws. These rules are proposed in compliance with OFM Guidance 3(a).
Statutory Authority for Adoption: RCW 31.12.516 and 31.12.365 (as passed legislature in 2013, section 6, chapter 34, Laws of 2013).
Statute Being Implemented: Chapter 31.12 RCW.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: DFI, division of credit unions, governmental.
Name of Agency Personnel Responsible for Drafting: Catherine Mele-Hetter, 150 Israel Road S.W., Olympia, WA 98501, (360) 902-0515; Implementation and Enforcement: Linda Jekel, 150 Israel Road S.W., Olympia, WA 98501, (360) 902-8778.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The rule amendments will not impose more than minor costs on the businesses impacted by the proposed rules.
A cost-benefit analysis is not required under RCW 34.05.328. Not applicable to the proposed rules.
February 5, 2014
Linda Jekel, Director
Division of Credit Unions
WAC 208-400-020 Definitions.
Unless the context clearly requires otherwise, as used in this chapter:
"Board" has the same meaning as ascribed in RCW 31.12.005(1).
"Board chair" means the serving chairperson of the board of directors of a credit union, who has been duly appointed by the board of directors to serve as its chair.
"CAMEL" means the rating system used to measure the safety and soundness of credit unions that are insured by the National Credit Union Share Insurance Fund (as defined in 12 U.S.C. Sec. 1783) and which scores a credit union's capital adequacy, asset quality, management, earnings, and asset/liability management (liquidity), both individually and on a composite basis.
"Credit union" has the same meaning as ascribed in RCW 31.12.005(5).
"Director" has the same meaning as ascribed to that term in RCW 31.12.005(8).
"Manager" means the duly appointed and serving chief executive officer of a credit union.
"Troubled condition" has the same meaning ascribed to that term in the rules of the National Credit Union Administration, at 12 C.F.R. Sec. 701.14 (b)(3).
"Unsafe or unsound practice" has the same definition as ascribed to that term in RCW 31.12.005(26).
WAC 208-400-030 Frequency of board meetings.
(1) Authority to determine the frequency of board of directors meetings. Subject to the provisions of this section, a board may determine the frequency of its meetings and must specify such frequency in its bylaws.
(2) Minimum meeting requirement. A board of directors must meet a minimum of six times in each calendar year and at least once per calendar quarter.
(3) Director's authority to require more frequent meetings. The director may require that a board meet more frequently if he or she finds that it is necessary for the board to meet more frequently to address examination matters, including without limitation, evidence of any of the following:
(a) The credit union's current composite CAMEL rating issued by the director is a 3, 4, or 5;
(b) The credit union's current management component CAMEL rating issued by the director is a 3, 4, or 5;
(c) The credit union's net worth ratio is less than seven percent;
(d) The credit union is currently in a troubled condition;
(e) In the judgment of the director, the credit union has committed an unsafe or unsound practice that has not been corrected to the satisfaction of the director and that continues to be a concern to the director, or the credit union is about to commit an unsafe or unsound practice; or
(f) The credit union has been notified in writing by the director of a significant supervisory or financial concern.
(4) Notification to the board. If the director determines as set forth in subsection (3) of this section, that a board of directors must meet more frequently than as set forth in subsection (2) of this section, the director will send written notice to the board chair, with a copy to the credit union's manager, setting forth the director's findings underlying the determination and the required frequency of the board of directors' meetings. This notice will remain in effect until rescinded in writing by the director.