TITLE 7. BANKING AND SECURITIES

PART 6. CREDIT UNION DEPARTMENT

CHAPTER 91. CHARTERING, OPERATIONS, MERGERS, LIQUIDATIONS

SUBCHAPTER J. CHANGES IN CORPORATE STATUS

7 TAC §91.1010

The Credit Union Commission (the Commission) proposes new §91.1010, concerning voluntary liquidations. The Commission also withdraws the previously proposed new §91.1010, which was published in the July 28, 2017, issue of the Texas Register (42 TexReg 3729). The notice of withdrawal is published in the Withdrawn section of this issue of the Texas Register.

The proposed new rule will provide guidance to credit unions when they are considering a voluntary liquidation of the institution. The guidelines contained in this proposed new rule will enable the board of directors or liquidating agent to conduct the liquidation of the credit union in a more orderly and expeditious manner and to arrange distribution of the assets to the members without undue delay.

In general, new §91.1010 results from the commission's review of Chapter 91, Subchapter J, under Texas Government Code, §2001.039. Although no comments were received on the published proposal, the Commission has determined that certain changes were appropriate to improve readability, provide better clarity on voting requirements, and to prevent any director or senior management employee from receiving any economic benefit in connection with the voluntary liquidation.

A voluntary liquidation is the dissolution of a solvent credit union with the assets being sold or collected, liabilities paid, and shares and deposits distributed under the direction of the board of directors or a duly appointed liquidating agent. Voluntary liquidation is an option only if the credit union is solvent. Texas Finance Code §126.101 prescribes that the commissioner shall issue a conservatorship order and appoint a conservator to manage a credit union if the commissioner finds the credit union is insolvent or in imminent danger of insolvency.

Overall, the revised proposed new rule will serve as a guide for conducting the voluntary liquidation of a credit union. The purpose for each new subsection is provided in the following paragraphs.

Subsection (a) Definitions, defines the terms, "voluntary liquidation," "liquidation date," and "liquidating agent."

Subsection (b) Initiating voluntary liquidation process, describes the timeframes and the required processes, once it is determined that liquidation is advisable and other alternatives are not acceptable, and the board of directors has voted to present the question of liquidation to the credit union's membership. It also provides that if the membership does not approve the recommendation to liquidate, the board of directors must request authorization from the Department before the credit union resumes business, resubmits the question to the membership, or requests the appointment of a conservator. Department review helps ensure that the credit union is properly positioned before the credit union implements whichever option the board of directors chooses.

Subsection (c) Notice of liquidation, explains the initial requirements upon an affirmative vote by the membership to liquidate, including notifying the Department, members, and creditors, and the publishing of a public notice, if so directed by the Department.

Subsection (d) Transaction of business during liquidation, delineates the activities that must be suspended, discontinued, or require prior approval after affirmative vote by the membership to liquidate. The subsection also prescribes that members must receive specific notice to discontinue the use of share and credit cards by a specified date.

Subsection (e) Liquidation plan, imposes a requirement that the board of directors develop a formal written plan for liquidation of the credit union's assets and the payment of shares/deposit. The plan must address prescribed areas and provide for the liquidation of the credit union within one year of the liquidation date.

Subsection (f) Approval of the liquidation proposal by membership, specifies that a member may vote on the liquidation proposal by submitting the ballot in person at a special meeting or by mailing in the ballot

The subsection also prohibits the offering of inducements to encourage members to participate in the vote. Further the subsection requires credit unions to conduct its membership vote in a fair and legal manner and hold its special meeting in a manner conducive to accommodating members wishing to attend.

Subsection (g) Distribution of assets, stipulates the order upon which all legitimate creditor claims shall be paid. The subsection also specifies the action necessary after all assets have been converted to cash and the books are closed.

Subsection (h) Economic benefit prohibits a director or senior management employee from receiving any economic benefit in connection with the voluntary liquidation.

Subsection (i) Continued supervision of voluntary liquidation, reaffirms that a liquidating credit union continues to be subject to the regulation and supervision of the Department. The Department may require the liquidating credit union to submit reports and the Department may conduct examination of the credit union as necessary or appropriate.

Subsection (j) Retention of records, provides that certain records of the liquidating credit union must be retained for a period of five years. The board of directors must designate a person to be responsible for the retained records.

Subsection (k) Certificate of dissolution and liquidation, establishes a deadline of 120 days after final distribution for the board of directors to provide certification to the Department that the credit union has been successfully dissolved and liquidated.

Subsection (l) Inquires after liquidation, prescribes that the person designated by the board of directors to retain the records of the liquidating credit union is also responsible for the timely response to any inquires received after the liquidation has been completed.

Before action is taken to voluntarily liquidate a credit union, the Commission encourages the board of directors to determine whether liquidation is advisable by carefully considering all factors leading to the proposal and carefully considering all available options. Generally, voluntary liquidation should only be considered in extreme cases because at least a portion of a members' shares/deposits may not be available during liquidation. This inability of a members to access their funds could impose significant personal hardships on the members.

Harold E. Feeney, Commissioner, has determined that for the first five year period the proposed new rule is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the new rule.

Mr. Feeney 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 as to what is expected of a credit union that elects to voluntarily liquidate. There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of adopting the new rule. There is no economic cost anticipated to the credit union system or to individuals required to comply with the new rule as proposed.

For each year of the first five years that the rule will be in effect, the rule will not:

create or eliminate a government program;

require the creation of new employee positions or the elimination of existing employee positions;

require an increase or decrease in future legislative appropriations to the agency;

increase fees paid to the department;

expand existing regulations;

increase or decrease the number of individuals subject to the rule's applicability;

positively or adversely affect this state's economy.

For the first five years the rule will be in effect, the rule will create a new regulation related to the voluntary liquidation of a credit union.

Written comments on the proposed new rule may be submitted in writing to Harold E. Feeney, Commissioner, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699 or by email to CUDMail@cud.texas.gov. To be considered, a written comment must be received on or before 5:00 p.m. on the 31st day after the date the proposal is published in the Texas Register.

The new rule is proposed under 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 §§126.451 - 126.458, which sets out the requirements for voluntary liquidations.

The specific section affected by the proposed new rule is Texas Finance Code, §§126.451 - 126.458.

§91.1010.Voluntary Liquidation.

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Voluntary liquidation means the dissolution of a credit union with the assets being sold or collected, liabilities paid, and shares/deposits distributed under the direction of the board of directors.

(2) Liquidation date means the date the membership votes to approve liquidation.

(3) Liquidating agent means the person or persons appointed by the board of directors to take possession of, manage, and liquidate the credit union.

(b) Initiating voluntary liquidation process.

(1) Unless the commissioner has issued a liquidation order, the board of directors may, by resolution, recommend the voluntary dissolution of the credit union and direct submission of the question to the members of the credit union.

(2) Within five days after the date the board adopts the resolution, the chairman of the board shall notify the commissioner, in writing, of the reasons for the proposed liquidation including a balance sheet and income statement as of the previous month-end.

(3) The board shall act promptly to obtain the membership's approval in accordance with subsection (f) of this section.

(4) The board's recommendation to dissolve and liquidate the credit union must be approved by the affirmative vote of a majority of members who submit ballots in person at the special membership meeting and by mail. If less than a majority vote to approve, the credit union may, subject to the commissioner's approval, resume normal business, resubmit the question of liquidation to the membership or request the appointment of a conservator under the Act and the rules adopted under it.

(5) After an affirmative vote by the members to dissolve and liquidate the credit union, the board of directors shall be responsible for conserving the assets, for expediting the liquidation, and for fair and equitable distribution of the assets to the members.

(6) Within 5 days after an affirmative vote to dissolve and liquidate the credit union the chairman shall notify the commissioner in writing of the intention to liquidate together with a list of the officers and directors.

(c) Notice of liquidation.

(1) If the vote to dissolve and liquidate the credit union is affirmative, the credit union shall:

(A) File a notice with the Department within five days after the liquidation date; and

(B) Mail a copy of the notice of liquidation to shareholders/depositors, other known creditors, and known claimants of the credit union within ten days after the liquidation date.

(2) A credit union shall publish public notice of liquidation, if so directed, and in the manner directed, by the Department.

(3) Creditors shall be provided at least 30 days after the liquidation date to submit their claims.

(d) Transaction of business during liquidation.

(1) Immediately after notice of the special meeting to consider voluntary liquidation is mailed to the membership, admission of new members shall be suspended. No new extensions of credit shall be funded during the period between the board of directors' adoption of the resolution recommending voluntary liquidation and the membership meeting called to consider voluntary liquidation, except for the issuance of loans fully secured by a pledge of shares and the funding of outstanding loan commitments approved before adoption of the board resolution. Collection of loans and interest, payments of necessary expenses, clearing of share drafts and credit card charges shall continue.

(2) If the membership votes to dissolve and liquidate the credit union, the credit union shall immediately discontinue payments on shares/deposits, withdrawal of shares/deposits (except for transfer of shares/deposits to loans and interest), transfer of shares/deposits to another share/deposit account, in the same credit union, granting of loans, and making of investments other than short-term investments shall be discontinued. The credit union shall continue to collect on loans with interest and shall continue to pay necessary expenses during the period of liquidation. The credit union shall direct its Members to discontinue the use of share drafts and credit cards, and shall inform Members that on and after the 15th calendar day after the liquidation date, items will no longer be cleared.

(3) Approval of the Department must be obtained prior to consummating any sale of assets which would not provide sufficient funds to pay shareholders/depositors dollar-for-dollar, principal plus any interest accrued or due to the shareholder/depositor, through the liquidation date.

(e) Liquidation Plan. The board of directors shall develop and approve a written plan for the liquidation of the assets and payment of shares/deposits. The liquidation plan shall provide for the liquidation of the credit union within one year of the liquidation date. At a minimum, a credit union's liquidation plan shall address the following areas:

(1) Qualifications and experience of the proposed liquidating agent and the compensation and expenses attributable to the service of such person or persons;

(2) Income and expense items must be projected to determine that sufficient funds will be available to finance the liquidation of the credit union;

(3) Schedule for payment of all debts and liabilities owed by the credit union;

(4) Partial distributions of shares/deposits should be considered as funds become available from the liquidation of assets;

(5) Distribution of the credit union's assets that remain after settlement of debts and liabilities to all persons entitled to them;

(6) Disposition or maintenance of any remaining or unclaimed funds, real or personal property, or other assets;

(7) Surety bond coverage of all persons who will handle or have access to funds of the credit union and the proposed discovery period after final distribution of assets; and

(8) Retention of the credit union's records after liquidation, and in a manner that complies with subsection (j) of this section.

(f) Approval of the liquidation proposal by membership.

(1) Not later than the 10th calendar day before the date of the special membership meeting to consider approval of the liquidation, the credit union shall notify, by first class mail, the Commissioner and each member who is eligible to vote on the proposal. The notice must adequately describe the purpose and subject matter of the vote and clearly inform members that they may vote at a special meeting held on the date set for the vote or by mailing in the ballot. The notice must include a clear and conspicuous disclosure of how the voluntary liquidation may affect the availability of funds on deposit and state the date, time, and place of the meeting. A ballot must be included in the same envelope as the notice.

(2) No director or senior management employee may receive any economic benefit in connection with the voluntary liquidation of the credit union other than compensation and other benefits paid to directors and senior management employees in the ordinary course of business.

(3) A credit union considering the question of liquidation must conduct its membership vote in a fair and legal manner. No inducements may be offered to encourage members to participate in the vote.

(4) A credit union should be careful to conduct its special membership meeting in a manner conducive to accommodating all members wishing to attend, including selecting a meeting location that can accommodate the anticipated number of attendees and is conveniently located. The meeting should also be held on a day and time suitable to most members' schedules.

(g) Distribution of assets.

(1) The liquidating agent shall use the credit union's assets to pay, in the following order:

(A) Secured creditors to the extent of the value of their collateral;

(B) Liquidation expenses, including a surety bond;

(C) Depositors;

(D) General creditors, including secured creditors to the extent that their claims exceed the value of their collateral; and

(E) Distributions to members in proportion to the shares/deposits held by each member.

(2) After all assets of the credit union have been converted to cash or found to be worthless, and all loans and debts owing to it have been collected or found to be uncollectible, and all obligations of the credit union have been paid/settled, except for shares/deposits due its members, the credit union shall close its books and compute the pro rata distribution to its members. The computation shall be based on the total amount in each share/deposit account as of the liquidation date or the date on which all share drafts have cleared, whichever is later.

(3) Payments must be made to members promptly after the pro rata distribution has been computed. The credit union may mail a check to the member's last known address, deliver the check personally to the member, or make the payment by wire or any other electronic means authorized by the member.

(4) Unclaimed share/deposit accounts, unpaid claims, and unpaid claims of members or creditors who failed to cash their final distribution checks shall be escheated in accordance with Texas laws.

(5) The Department shall be notified in writing within five days after the final distribution of assets to the members begins.

(h) Economic benefit. No director or senior management employee may receive any economic benefit in connection with the voluntary liquidation of the credit union other than compensation and other benefits paid to directors and senior management employees in the ordinary course of business.

(i) Continued supervision of voluntary liquidation.

(1) A voluntary liquidation of a credit union shall be conducted only with the continued supervision of the Department. The commissioner may conduct any examinations of the credit union the commissioner considers necessary or appropriate.

(2) The credit union shall submit a report to the Department within 10 business days after the start of liquidation showing the credit union's balance sheet as of the start of liquidation. The liquidating credit union shall submit a report of progress as requested by the Department.

(3) If the commissioner has reason to conclude the voluntary liquidation of a credit union is not being safely or expeditiously conducted, or is being conducted in violation of this section, the commissioner may take possession of the business and property of the credit union in the same manner, with the same effect, and subject to the same rights accorded the credit union as if the commissioner had issued a liquidation order. The commissioner may appoint a new liquidating agent and proceed to liquidate the affairs of the credit union as provided in the Finance Code, Title 3, Subtitle D, Subchapter E.

(j) Retention of records.

(1) The board of directors shall appoint a custodian for the credit union's records that are to be retained after the final distribution of assets.

(2) The custodian shall retain all records of the liquidating credit union that are necessary to establish that the credit union paid creditors, and distributed assets to the members fairly and equitably in accordance with the approved liquidation plan. The custodian shall retain the records for a period of five years following the date the Department cancels the credit union's charter.

(k) Certificate of dissolution and liquidation. Within 120 days after the credit union begins final distribution of assets to members, it shall file with the Department a duly executed Certificate of Dissolution and Liquidation.

(l) Inquiries after liquidation. It will be the responsibility of the custodian for the credit union's records to respond timely to inquiries after liquidation.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on November 3, 2017.

TRD-201704460

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: December 17, 2017

For further information, please call: (512) 837-9236


SUBCHAPTER M. ELECTRONIC OPERATIONS

7 TAC §91.4001

The Credit Union Commission (the Commission) proposes amendments to §91.4001, concerning authority to conduct electronic operations. The proposed amendments would expand the examples of electronic means or facilities to include mobile applications and eliminates the example of the World Wide Web. The proposal also institutes a new requirement that credit unions that use electronic means and facilities must employ a tested incident response to minimize the impact of a data breach or other incident on members.

In general, the purpose of the amendments to §91.4001 is to implement changes resulting from the commission's review of Chapter 91 Subchapter M under Texas Government Code, §2001.039. The notice of intention to review Chapter 91, Subchapters D, M, and N was published in the Texas Register on August 25, 2017, (42 TexReg 4313) and the amendments are proposed as a result of the Department's general rule review. The department did not receive any comments on the notice of intention to review.

Incident response plans are similar to other crisis management plans credit unions should develop. A plan isn't a plan, however, until it has survived an actual test. It is important for credit unions to periodically test their response plans before an actual incident "tests" it for the credit union.

Harold E. Feeney, Commissioner, has determined that for the first five year period the proposed amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Mr. Feeney has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will reduce reputation risk during and in the aftermath of an incident and provide greater ease of use of the rule. There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of adopting the amended rule. There is no economic cost anticipated to the credit union system or to individuals required to comply with the rule amendments as proposed.

For each year of the first five years that the rule will be in effect, the rule will not:

• create or eliminate a government program;

• require the creation of new employee positions or the elimination of existing employee positions;

• require an increase or decrease in future legislative appropriations to the agency;

• increase fees paid to the department;

• create a new regulation;

• increase or decrease the number of individuals subject to the rule's applicability;

• positively or adversely affect this state's economy.

For the first five years the rule will be in effect, the rule will expand existing regulations related to conducting electronic operations.

Written comments on the proposed amendments may be submitted in writing to Harold E. Feeney, Commissioner, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699 or by email to CUDMail@cud.texas.gov. To be considered, a written comment must be received on or before 5:00 p.m. on the 31st day after the date the proposal is published in the Texas Register.

The amendments are proposed under 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 statutory provisions affected by the proposed amendments are contained in Texas Finance Code Chapter 15 and Title 3.

§91.4001.Authority to Conduct Electronic Operations.

(a) A credit union may use, or participate with others to use, electronic means or facilities to perform any function or provide any product or service as part of an authorized activity. Electronic means or facilities include, but are not limited to, automated teller machines, automated loan machines, mobile applications, personal computers, the Internet, the World Wide Web, telephones, and other similar electronic devices.

(b) To optimize the use of its resources, a credit union may market and sell, or participate with others to market and sell, electronic capacities and by-products to others, provided the credit union acquired or developed these capacities and by-products in good faith as part of providing financial services to its members.

(c) If a credit union uses electronic means and facilities authorized by this rule, the credit union's board of directors must require staff to:

(1) Identify, assess, and mitigate potential risks and establish prudent internal controls, and system backup procedures; [and]

(2) Implement security measures designed to ensure secure operations. Such measures should take into consideration:

(A) the prevention of unauthorized access to credit union records and credit union members' records;

(B) the prevention of financial fraud through the use of electronic means or facilities; and

(C) compliance with applicable security device requirements for teller machines contained elsewhere in Chapter 91; and[.]

(3) Employ an incident response plan, which has been subjected to reasonable testing, to minimize the impact of a data breach or other electronic incident while quickly restoring operations, credibility, and security.

(d) All credit unions engaging in such electronic activities must comply with all applicable state and federal laws and regulations as well as address all safety and soundness concerns.

(e) A credit union shall review, on at least an annual basis, its system backup procedures for all electronic activities.

(f) A credit union shall not be considered doing business in this State solely because it physically maintains technology, such as a server, in this State, or because the credit union's product or services are accessed through electronic means by members located in this State.

(g) A credit union that shares electronic space, including a co-branded web site, with a credit union affiliate, or another third-party must take reasonable steps to clearly and conspicuously distinguish between products and services offered by the credit union and those offered by the credit union's affiliate, or the third-party.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on November 3, 2017.

TRD-201704462

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: December 17, 2017

For further information, please call: (512) 837-9236


7 TAC §91.4002

The Credit Union Commission (the Commission) proposes amendments to §91.4002 concerning transactional web site notice requirements; and security review. The proposed amendments would require a review of the adequacy of the web site's security measures annually instead of once every two years. In addition, the proposed amendments would provide clarification, better readability, and would update the rule.

In general, the purpose of the amendments to §91.4002 is to implement changes resulting from the commission's review of Chapter 91 Subchapter M under Texas Government Code, §2001.039. The notice of intention to review Chapter 91, Subchapters D, M, and N was published in the Texas Register on August 25, 2017, (42 TexReg 4313), and the amendments are proposed as a result of the Department's general rule review. The department did not receive any comments on the notice of intention to review.

As technology continues to ingrain itself into nearly all aspects of credit union operations, the threat of being hacked becomes more and more real. As a result, cyber security is a major concern for not just individuals, but also credit unions, who are trusted to securely store data that ranges from member names and email addresses to even more sensitive information like credit card numbers and trade secrets. These days, data is currency, and plenty of nefarious folks are willing to spend- and risk- almost anything to get it.

With all of this in mind, it's more critical now than ever before that credit unions implement a more robust approach to security testing for their websites that are capable of receiving or storing important data from members.

Harold E. Feeney, Commissioner, has determined that for the first five year period the proposed amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Mr. Feeney has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will be improved practices to mitigate risk and greater ease of use of the rule. There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of adopting the amended rule. There is no economic cost anticipated to the credit union system or to individuals required to comply with the rule amendments as proposed.

For each year of the first five years that the rule will be in effect, the rule will not:

• create or eliminate a government program;

• require the creation of new employee positions or the elimination of existing employee positions;

• require an increase or decrease in future legislative appropriations to the agency;

• increase fees paid to the department;

• create a new regulation;

• increase or decrease the number of individuals subject to the rule's applicability;

• positively or adversely affect this state's economy.

For the first five years the rule will be in effect, the rule will expand existing regulations related to transactional website notice requirements and security review.

Written comments on the proposed amendments may be submitted in writing to Harold E. Feeney, Commissioner, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699 or by email to CUDMail@cud.texas.gov. To be considered, a written comment must be received on or before 5:00 p.m. on the 31st day after the date the proposal is published in the Texas Register.

The amendments are proposed under 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 statutory provisions affected by the proposed amendments are contained in Texas Finance Code Chapter 15 and Title 3.

§91.4002.Transactional Web Site Notice Requirement; and Security Review.

(a) A credit union must file a written notice with the commissioner at least 30 days before it establishes a transactional web site. The notice must:

(1) Include an address for and a description of the transactional features of the web site;

(2) Indicate the date the transactional web site will become operational; and

(3) List a contact person familiar with the deployment, operation, and security of the transactional web site.

(b) For the purposes of this chapter a transactional web site is an Internet site that enables users to access an account and conduct financial transactions such as [accessing an account, obtaining an account balance,] transferring funds, processing bill payments, opening an account, applying for or obtaining a loan, or purchasing other authorized products or services.

(c) Credit unions that [, which] have a transactional web site[,] must provide for a review of the adequacy of the web site's security measures annually [at least once every two years]. The scope of the review should cover the adequacy of physical and logical protection against [unauthorized access including] denial of service attacks and other attack vectors designed to gain unauthorized access to the system [and other forms of electronic access]. If the credit union outsources this technology platform, it can rely on testing or audits performed for the service provider to the extent it satisfies the scope requirements of this subsection.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on November 3, 2017.

TRD-201704463

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: December 17, 2017

For further information, please call: (512) 837-9236


SUBCHAPTER N. EMERGENCY OR PERMANENT CLOSING OF OFFICE OR OPERATION

7 TAC §91.5001

The Credit Union Commission (the Commission) proposes amendments to §91.5001, concerning emergency closing. The proposed amendments would institute a new requirement that a credit union should post notice of an emergency closing of an office or operation on its website and any social media pages.

In general, the purpose of the amendments to §91.5001 is to implement changes resulting from the commission's review of Chapter 91 Subchapter N under Texas Government Code, §2001.039. The notice of intention to review Chapter 91, Subchapters D, M, and N was published in the Texas Register on August 27, 2017, (42 TexReg 4313) and the amendments are proposed as a result of the Department's general rule review. The department did not receive any comments on the notice of intention to review.

Web sites and social media are not a fad or trend. They are enduring realities of online existence. Members are increasingly embracing these social networks as an integral part of their everyday lives. Credit union website and social media accounts are accessible 24/7/365 and are indispensable in getting the word out to members about emergency closings of offices and operations.

Harold E. Feeney, Commissioner, has determined that for the first five year period the proposed amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Mr. Feeney has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will be better notice to members. There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of adopting the amended rule. There is no economic cost anticipated to the credit union system or to individuals required to comply with the rule amendments as proposed.

For each year of the first five years that the rule will be in effect, the rule will not:

• create or eliminate a government program;

• require the creation of new employee positions or the elimination of existing employee positions;

• require an increase or decrease in future legislative appropriations to the agency;

• increase fees paid to the department;

• create a new regulation;

• increase or decrease the number of individuals subject to the rule's applicability;

• positively or adversely affect this state's economy.

For the first five years the rule will be in effect, the rule will expand existing regulations related to an emergency closing of a credit union office or operation.

Written comments on the proposed amendments may be submitted in writing to Harold E. Feeney, Commissioner, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699 or by email to CUDMail@cud.texas.gov. To be considered, a written comment must be received on or before 5:00 p.m. on the 31st day after the date the proposal is published in the Texas Register.

The amendments are proposed under 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 statutory provisions affected by the proposed amendments are contained in Texas Finance Code Chapter 15 and Title 3.

§91.5001.Emergency Closing.

(a) If the officer in charge of a credit union determines that an emergency that affects or may affect one or more of the credit union's offices or operations exists or is impending, the officer may determine:

(1) not to conduct the involved operations or open the offices on any normal business day of the credit union until the emergency has passed; or

(2) if the credit union is open, to close the offices or the involved operations for the duration of the emergency.

(b) Subject to subsection (c) of this section, a closed office or operation may remain closed until the officers determine that the emergency has ended and for any additional time reasonably required to reopen.

(c) A credit union that closes an office or operation under this section shall notify the commissioner of its action by any means available and as promptly as conditions permit. In addition, notice of such closure should be posted on the home page of the credit union's website and on its social media pages. An office or operation may not be closed for more than three consecutive days, excluding days on which the credit union is customarily closed, without the commissioner's written approval.

(d) Each credit union shall maintain on file with the department a report of emergency contact information pertaining to its officers, directors, and committee members in such form as the commissioner may prescribe.

(e) In this chapter, the following words and terms shall have the following meanings:

(1) Emergency- means a condition or occurrence that physically interferes with the conduct of normal business at the offices of a credit union or of a particular credit union operation or that poses an imminent or existing threat to the safety or security of persons, property, or both. The term includes a condition or occurrence arising from:

(A) fire, flood, earthquake, hurricane, tornado, or wind, rain, ice or snow storm;

(B) labor dispute or strike;

(C) disruption or failure of utilities, transportation, communication or information systems and any applicable backup systems;

(D) shortage of fuel, housing, food, transportation, or labor;

(E) robbery, burglary, or attempted robbery or burglary;

(F) epidemic or other catastrophe; or

(G) riot, civil commotion, enemy attack, or other actual or threatened act of lawlessness or violence.

(2) Officer in charge- means the president of the credit union, or a person designated by the president, who shall have the authority to take all necessary and appropriate actions to deal appropriately with the emergency. The president of a credit union shall always have an individual designated as an officer in charge during his/her absence or unavailability.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on November 3, 2017.

TRD-201704465

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: December 17, 2017

For further information, please call: (512) 837-9236


7 TAC §91.5005

The Credit Union Commission (the Commission) proposes amendments to §91.5005, concerning permanent closing of an office. The proposed amendments would institute a new requirement that a credit union post notice of the permanent closing of an office on its website and any social media pages at least 30 days prior to the proposed closing.

In general, the purpose of the amendments to §91.5005 is to implement changes resulting from the commission's review of Chapter 91, Subchapter N, under Texas Government Code, §2001.039. The notice of intention to review Chapter 91, Subchapters D, M, and N was published in the Texas Register on August 25, 2017, (42 TexReg 4313) and the amendments are proposed as a result of the Department's general rule review. The department did not receive any comments on the notice of intention to review.

Web sites and social media are not a fad or trend. It's an enduring reality of online existence. Members are increasingly embracing these social networks as an integral part of their everyday lives. Credit union website and social media accounts are accessible 24/7/365 and are indispensable in getting the word out to members about the permanent closings of office.

Harold E. Feeney, Commissioner, has determined that for the first five year period the proposed amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Mr. Feeney has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will be better notice to members. There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of adopting the amended rule. There is no economic cost anticipated to the credit union system or to individuals required to comply with the rule amendments as proposed.

For each year of the first five years that the rule will be in effect, the rule will not:

• create or eliminate a government program;

• require the creation of new employee positions or the elimination of existing employee positions;

• require an increase or decrease in future legislative appropriations to the agency;

• increase fees paid to the department;

• create a new regulation;

• increase or decrease the number of individuals subject to the rule's applicability;

• positively or adversely affect this state's economy.

For the first five years the rule will be in effect, the rule will expand existing regulations related to the permanent closure of credit union office.

Written comments on the proposed amendments may be submitted in writing to Harold E. Feeney, Commissioner, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699 or by email to CUDMail@cud.texas.gov. To be considered, a written comment must be received on or before 5:00 p.m. on the 31st day after the date the proposal is published in the Texas Register.

The amendments are proposed under 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 statutory provisions affected by the proposed amendments are contained in Texas Finance Code Chapter 15 and Title 3.

§91.5005.Permanent Closing of an Office.

A credit union may permanently close any of its established offices or service facilities. 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 or service facility and the homepage of the credit union's website and any social media pages at least 30 days prior to the proposed closing.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on November 3, 2017.

TRD-201704466

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: December 17, 2017

For further information, please call: (512) 837-9236